Tax Registration Process in Canada: Complete Guide

I used to think tax registration was this incredibly complex process that would take forever to figure out. But a Canadian friend of mine wouldn't stop praising how smooth the tax registration process is in Canada.

So I dug deep into the whole process to see what all the fuss was about.

And she was absolutely right!

The CRA has really streamlined things, and there are some fantastic online tools that make the entire experience much more user-friendly than I anticipated.

Below, I'll share all the helpful insights I discovered, like core types, registration steps, and more.

Canada's Tax Registration Ecosystem, at a Glance

Canada's tax registration system is divided into two main components: federal registrations managed by the Canada Revenue Agency and provincial sales tax systems that vary significantly by jurisdiction. Below's a glance at both components.

Federal Registrations

Canada's Federal tax registration system recognizes that businesses have different tax obligations that require separate tracking. Rather than one single registration, businesses typically need multiple accounts depending on their activities - like collecting sales tax, handling employee deductions, or filing corporate returns.

When you register for specific tax obligations, each one creates a separate account linked to your Business Number.

Each account gets its own 15-digit number that starts with your 9-digit Business Number, followed by a 2-letter code identifying the tax type, and a 4-digit reference number. For example, if your Business Number is 123456789, your GST account would be 123456789RT0001, where "RT" indicates sales tax collection and "0001" is the reference number.

Overall, there are four main types of tax accounts a business needs to register.

1. GST/HST Account (RT): Required when taxable revenues exceed $30,000 over four consecutive quarters; voluntary registration available below this threshold to claim input tax credits.
2. Payroll Account (RP): Mandatory when you hire your first employee to remit income tax, CPP, and EI contributions.
3. Corporate Income Tax (RC): Required for all incorporated businesses to file T2 returns; sole proprietors report on personal T1 returns instead.
4. Import/Export (RM): Needed for any business importing goods into Canada or exporting internationally; register through the CARM Client Portal.

Each type serves a specific purpose and is activated based on particular business activities or revenue thresholds.

Provincial Variations

Some provinces in Canada have their own local obligations for their systems. These provincial tax variations are further split into two approaches: some provinces bundle everything together, while others keep provincial tax separate from the federal GST.

Source: https://www.taxtips.ca/salestaxes/sales-tax-rates-2025.htm

HST provinces bundle federal and provincial tax into one system: register once, file once. The other provinces require separate registrations for their provincial tax, each with different rules and thresholds.

Step-by-Step: How to Complete Canada Tax Registration?

The CRA registration process consists of five distinct phases that ensure accurate account setup and proper business identification within the tax system.

Step 1: Determine Your Registration Requirements

Review your business situation to identify which registrations apply:

• If your taxable revenue exceeds $30,000 over four consecutive quarters, then GST/HST registration is mandatory.
• If you have employees, then payroll registration is required for tax withholdings.
• If your business is incorporated, then corporate tax registration is needed for T2 filing.
• If you import or export goods, then import/export registration is necessary.
• If you operate in BC, Saskatchewan, Manitoba, or Québec, then separate provincial tax registration may be required based on provincial thresholds.

Most businesses will need multiple registrations depending on their specific operations and growth stage.

Step 2: Gather Required Documents and Information

Collect the necessary information before starting registration. This includes your business legal name, operating name if different, business and mailing addresses, contact details, business start date, and description of activities.

Incorporated businesses need incorporation documents, while partnerships require partnership agreements. You'll also need banking information and social insurance numbers for business owners.

Step 3: Choose Your Registration Method

Here, CRA gives you three options. Pick the channel that fits your situation. Options are:

1. Business Registration Online (BRO): Fastest option if you qualify. You can register for your BN and up to 14 different tax accounts in one online session.
2. Form RC1 by mail/fax: Prefer the old school paper filing? Then, fill out the RC1 form and mail or fax it to the nearest tax service office. Although it takes longer, this approach works for complex business situations that don't fit BRO's requirements.
3. Phone registration: Call the CRA Business enquiries line at 1-800-959-5525 to register by phone in special circumstances.

The registration method you select should align with your business urgency and documentation requirements.

Step 4: Complete the Registration Process

Submit your information through your chosen method.

• Online users complete required fields and submit electronically.
• Paper applicants mail or fax completed Form RC1 to the appropriate tax office.
• Phone registrants provide information to CRA representatives who process the application.

Accuracy is important since errors delay processing.

Step 5: Verify Your CRA Accounts Registrations

Once your registration request is processed, you will get confirmation depending on how you applied. BRO users get immediate confirmation with their BN and account numbers. Paper and phone applicants need to wait for 2–3 weeks.

Verify your requested accounts are active and match your records. If something's wrong, contact CRA immediately rather than assuming it will get sorted out automatically. Post that, set up your CRA My Business Account online and manage your tax accounts forward.

Canada's Special Tax Registration Scenarios

The standard registration process works fine for most businesses. However, there are some exceptions in this process. We have listed a few below:

Non-Resident Business Registration

If you're a non-resident running business activities in Canada, you pay Canadian tax only on income earned from Canadian sources. This usually falls under two categories:

• Part I tax: This applies if you're carrying on business in Canada.
• Part XIII tax: It’s a withholding tax on things like dividends, royalties, pensions, and management fees.

Part XIII tax gets withheld automatically at 25% unless there's a tax treaty between Canada and your country that reduces the rate. Meanwhile, for Part I, you pay regular federal tax rates plus a 48% surtax, unless your business operates in a specific province where you pay provincial tax instead.

Québec Business Registration

Québec is separated from the rest of Canada when it comes to tax registration. And the biggest difference lies in sales tax.

Instead of GST/HST, Québec runs its own Québec Sales Tax (QST) system. If you're doing business in Québec, you'll likely need to register for QST and file returns directly with Revenu Québec. Payroll and corporate tax filings also go through provincial systems.

So, if you're operating in multiple provinces, get ready for double duty. CRA on one side, Revenu Québec on the other!

Digital Economy Businesses

Most digital businesses were flying under the radar before 2021. In July 2021, Canada decided to put a stop to foreign digital platforms collecting Canadian dollars without paying Canadian taxes.

Now, digital companies must register for GST/HST after hitting CAD 30,000 in sales. The rule applies even if your business has no physical presence in Canada. What matters is where your customers are and how much they're paying you.

What to do after registering for GST in Canada?

Getting your GST number is just the beginning. One of the first operational challenges you'll face is verifying GST numbers from your business customers. When other businesses provide their GST numbers for tax-exempt purchases, you need to confirm these numbers are valid to avoid compliance issues. The CRA provides a manual lookup tool, but this becomes time-consuming as your customer base grows.

For businesses handling regular GST number verification, automated solutions can streamline this process significantly.

We at Signzy have purpose-built our Canada GST Verification API specifically for this challenge, enabling real-time validation that integrates directly into your existing systems. This eliminates manual lookups while ensuring accurate compliance with Canadian tax requirements.

If you want to see exactly how this works for your business, book a demo slot here today.