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When Should You Self-Assess GST?

March 25, 2013

Tax Question:

When should you self-assess for GST and why?


Normally whenever a Canadian Corporation purchases goods, they are charged GST on the goods or services supplied if the goods are subject to GST. However, there are occasions when goods and services are brought into British Columbia from outside of Canada. In these cases, the GST is often not charged because the supplier is unaware of Canada’s tax regime and has no reason to charge GST. In these situations, Canadian corporations may be required to self-assess the GST.


The main reason why self-assessment is required is to prevent taxpayers who are engaged in non-commercial activities from avoiding paying GST on purchased services and goods for use in Canada by acquiring these goods and services outside Canada. For example, a corporation purchases a vehicle that is predominately used for personal purposes, if no GST has been paid on that vehicle because it was bought in Washington State, then there may be a risk that no GST is assessed on the personal tax benefit of the employee who is using that vehicle.

In many cases, the process of self-assessing GST is a paper-pushing exercise, and no actual cash is paid to CRA. This is because the corporation reports the amount of GST being self-assessed as collected and then reports the same amount of GST as an input tax credit (ITC). As the two amounts cancel each other out, there is no net cash impact on the corporation. However, to claim an ITC on the goods imported they have to be used for commercial activities. No self-assessment is required for goods brought into BC that are purchased for consumption, use or for exclusive supply (over 90%) in the course of commercial activities.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.

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