Closing a GST/HST account
How and when to close a GST/HST account:
How and when to close your GST/HST account
Once you are ready to close your GST/HST account, you will need to do the following:
- Make sure you have the following information:
- Business Number
- Legal name of the business
- Cancellation date and reason for closing the GST/HST account
- Complete Form RC145, Request to Close Business Number (BN) Program Accounts and send it to your tax centre, or call our Business enquiries line at 1-800-959-5525.
Cancellation date and reason for closing the GST/HST account
When you close your account, you need to give us a reason why you no longer need a GST/HST account.
I am closing my business
Your effective date of closure is the day your business ends.
I am selling my business
Whether you are a GST/HST registrant or not, GST/HST generally applies to the sale of your business.
However, you may be able to jointly elect with the recipient to have no GST/HST payable on the sale of your business, or part of your business, if you meet the conditions for making a joint election.
The recipient must acquire at least 90% of the property necessary to carry on the business (or part) as a business. This election cannot be used if you sell only individual assets of your business, or if you are a registrant and the recipient is not.
Any property not acquired under the agreement, but that the recipient needs to carry on the business (for example, real property), has to fall within the remaining 10% of the fair market value (FMV) of all the property acquired.
To make this election, use Form GST44, Election Concerning the Acquisition of a Business or a Part of a Business.
See Selling a business for more information on other tax implications of the sale of your business.
I am a sole proprietor, partnership, or corporation that is a small supplier
If your total taxable revenues fall below the Small supplier limit calculation amount, you may decide to deregister (close) your GST/HST account. If this is the case, you must have been registered for at least one full year before we will close your account.
I am a public service body that is small supplier
If your total taxable revenues fall below the Small supplier limit calculation for public service bodies or the Small supplier limit calculation for charities and public institutions, you may decide to deregister (close) your GST/HST account. If this is the case, you must have been registered for at least one full year before we will close your account.
If your public service body meets certain criteria, it may be able to apply to have any qualifying branch or division designated as a small supplier division by using Form GST31, Application by a Public Service Body to have Branches or Divisions Designated as Eligible Small Supplier Divisions.
I am no longer making taxable supplies
If you stop making taxable supplies, you no longer need to be registered. You can ask us to deregister your GST/HST account.
I am filing for bankruptcy
You have to send a copy of the court issued Assignment in Bankruptcy, a Bankruptcy Notice, or correspondence entitled First Meeting of Creditors to your tax services office. Usually, your Business Number (BN) will be closed after the discharge.
If you engage in or continue a business activity outside of the estate beginning on the day after the assignment into bankruptcy, you will be considered a new entity and will require a new BN and GST/HST account. The small supplier threshold for mandatory GST/HST registration begins on the day immediately after the assignment into bankruptcy.
Making a proposal in bankruptcy is not the same as filing for bankruptcy. If you make a proposal in bankrputcy (in other words, a payment arrangement with your creditors to prevent bankruptcy), your GST/HST account will not be closed automatically. If a trustee is appointed, they do not need to open another program account for access to your property during this period. It is important that you forward copies of all documentation relating to your proposal in bankruptcy to your tax services office because it may impact your GST/HST account.
I am in receivership
When you cannot pay your debts, a receiver may be appointed by a court through a court order, or by a secured creditor through a letter of appointment to:
- take control of property;
- supervise liquidation proceedings; and
- remit the proceeds according to priorities established by common or statutory law.
A receiver may either take control of your business, using your existing GST/HST account, to report the activities of the receivership or may open a separate GST/HST account as part of your existing BN.
Most receiverships ultimately lead to a wind-up of a client's activities and to the closing of that client's BN.
See also Receivership/Bankruptcy.
I am merging or amalgamating with another business
In a merger one corporation absorbs one or more corporation(s) and continues to carry on business as usual. An amalgamation takes place when two or more corporations known as predecessor corporations, combine their businesses to form a new successor corporation. Based on the information received, we make the necessary changes to the old BNs including the corporation income tax accounts, and, if necessary, register a new BN and GST/HST account for the newly created corporation. In some cases, the newly amalgamated corporation can keep the BN and the GST/HST account number of the dominant predecessor.
When the GST/HST accounts of the other predecessors are to be closed, you must file the returns up to the day before the date of merger/amalgamation, or in some cases, to the date of deregistration (if the date is different than the merger/amalgamation date).
Also see Amalgamation for information on how the amalgamation affects your BN and other CRA business accounts.
The sole proprietor of the business has passed away
When the owner of a sole proprietorship passes away, the GST/HST account will have to be closed and a final GST/HST return will have to be filed.
Also see Retirement or death for information on the BN and other CRA business accounts.
A member of the partnership has retired or passed away
The status of the GST/HST account, as well as the BN, depends on the type of partnership agreement. It is possible to bring in partners without having to register for a new BN. However, in some cases where the partners change, the business would be considered a new legal entity and would require a new BN with a new GST/HST account.
If it is determined that the partnership will cease to exist, its GST/HST account will have to be closed and a final GST/HST return will have to be filed.
Also see Retirement or death for information on the BN and other CRA business accounts.
Your obligations after closing your GST/HST account
- Determine the GST/HST owing on non-capital property held at the time of closing
- Determine the GST/HST owing on capital property held at the time of closing
- Adjust your ITCs for services, rents, royalties, and similar payments at time of closing
- File your final GST/HST return and remit any amount owing
Determine the GST/HST owing on non-capital property held at the time of closing
Remit the GST/HST on the fair market value of each of these properties just before you close your account. Report this GST/HST on your final return.
Determine the GST/HST owing on capital property held at the time of closing
You are considered to have sold using capital property you held for use in your commercial activities immediately before closing your GST/HST account and to have collected tax equal to the basic tax content of the capital property at that time.
Use the change in use rules for this property to determine if you have tax owing.
Include the tax you are considered to have collected in your net tax calculation on your final return. Generally, all or part of the ITCs previously claimed on this property have to be repaid.
Adjust your ITCs for services, rents, royalties, and similar payments at time of closing
You cannot claim ITCs for rent, royalties, or similar payments that relate to the period after you close your GST/HST account. You have to make an adjustment to your net tax calculation on your final return if you have claimed ITCs for the GST/HST paid or payable on these payments.
However, you can claim an ITC for the GST/HST that becomes payable after you close your GST/HST account for services, rent, royalties, or similar payments that relate to a period before you close that account.
File your final GST/HST return and remit any amount owing
When you close your account, you are considered to have two separate reporting periods. You may, therefore, have to file two returns as follows:
- a return for a reporting period that ends the day before you close your GST/HST account; and
- a second return for a reporting period that begins the day you closed your GST/HST account and ends on the last day of that month. This return is only required if you have tax to remit for that period.
You are an annual filer with a reporting period of January 1 to December 31, 2014. You closed your business on October 21, 2014, and closed your GST/HST account on the same day. Send us:
- a final return for the period January 1 to October 20, 2014, which is due November 20, 2014; and
- an additional return if your business has tax to remit for the period October 21 to October 31, 2014, which is due November 30, 2014.
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