It is important to collect the correct amount of sales tax, because if the amount collected is too low, the event organizer is responsible for the difference—plus, “regular” interest and “penalty” interest. Another factor to keep in mind, is that the Canada Revenue Agency (CRA) appears to be targeting not-for-organizations for GST/HST audits.
The purpose of this article is to highlight some of the challenges related to collecting and remitting conference related sales tax for event planning.
In general, GST/HST/QST should be added to the cost of conference and event registrations, exhibit space, and sponsorships. However, there are exceptions.
GST/HST Exceptions
1. Provincial government departments and most of their agencies are exempt from GST/HST.
2. Non-resident exhibitors are not charged GST/HST; a non-resident is an organization that is not based in Canada and that is not registered to collect GST/HST with CRA.
3. Sponsorships
A) Not-for-Profits: GST/HST should be charged on all sponsorships, except under very special circumstances.
The general rule is that if the sponsor receives a benefit in the form of “advertising”, then sales tax should be collected. To protect our clients, we charge sales tax on all sponsorships.
If you think that the type of sponsorship might be an exception, then you can call CRA’s GST/HST Rulings call centre at 1 (800) 959-8287 to obtain their “opinion”.
Warning: the “opinion” you receive from CRA about anything from one of their call centres is not binding. If you want to know the answer with certainty, then you can request a written ruling at no-cost by writing to CRA.
B) Registered Charities: GST/HST should be charged if the value received by the sponsor is more than 50% of the value of the “advertising” that they receive.
“Value” is very difficult to determine, e.g. if a sponsor’s name appears on advertising that promotes an event, for example, then it is not subject to tax; however, if a building is named in return for a donation, then it is taxable
You can learn more from CRA’s Excise and GST/HST News – No. 93.
4. Small Suppliers Exemptions and Definitions
CRA exemptions small suppliers from having to register to collect GST/HST.
A small supplier is an organization whose revenue, in the previous four consecutive calendar quarters is less than:
– For-profit organizations $ 30,000
– Not-for-profit organizations $ 50,000
– Registered charities $250,000
Québec Sales Tax (QST) Special Rules for Events
If your non-Québec based organization is holding a conference or event where a registration fee is charged, then you must registered with Revenu Québec—even if you are exempt from registering for GST/HST because your revenue is less than $50,000 per year.
The QST may seem as if it is harmonized with GST—it isn’t completely harmonized—as always, the devil is in the details.
You can learn more by reading our article GST/HST and QST – Do You Know What to do for Québec Events and Members?
Co-Hosting an Event
If you are co-hosting an event, then you have to be very careful to ensure that your organization can recover the GST/HST/QST you paid or is owed on purchases and expenses.
You can recover these Input Tax Credits (ITCs) only if the name on the invoice is the same as the name on the organization that collected the GST/HST/QST.
There are two general exceptions:
1. You are reimbursing an employee or volunteer.
2. You have advised CRA about the relationship between the organizations co-hosting the conference.
You can do this using CRA’s form GST 506, Election and Revocation of an Election between Agent and Principal; Revenu Québec also has a GST form 506.
There is one potential risk in making this election: you agree to assume responsibility for the payment of GST/HST, if your co-host fails to remit their share of the taxes.
The above article is provided for information purposes only. It constitutes general information relating to GST, HST, and QST. It does not constitute legal, tax, accounting, or other professional advice and you may not rely on it as such.