Staying out of the GST/HST system
A charity need not register for the GST/HST — or may choose to “de-register” — if its annual taxable sales do not exceed $50,000. (The limit for businesses generally is $30,000.) Below this level, a charity is a “small supplier”, and can choose not to register, so that it does not charge GST/HST on taxable sales.
In addition, there is a “total revenue” threshold, below which a charity or public institution may choose to remain a small supplier and not register (even if it is over $50,000 in taxable sales). This “total revenue” threshold is $250,000. Total revenue for this purpose includes all sources — grants and donations as well as sales.
Due to the above rules, many charities can choose not to register and stay out of the GST/HST system entirely. Effectively, even their supplies that would have been taxable are exempt.
Note that if a charity is GST-registered and chooses to de-register, it may have to repay certain input tax credits it may have claimed in the past.
Many charges are exempt
The rules above apply only to taxable sales. Most supplies by a charity are exempt. However, certain supplies are taxable: e.g., most admissions, recreational activities, and most sales of goods in a charity’s store.
Examples of a charity’s supplies that are exempt include:
- hall rentals, room rentals, and other short-term leases or licences of real property (except where a special election on Form GST 26 makes them taxable)
- parking
- almost all services, including catering services.