Former and current small business owners may be getting calls from the Canada Revenue Agency in the coming weeks to ask about dormant GST accounts. Account holders with no activity are being contacted under a new program to help close unused accounts.
For example, a client had started a business as a sole proprietorship but incorporated 18 months into operating. The corporation opened a GST account to make the quarterly remittances, so the personal GST account had no income. After filing nil returns for more than five years, the client had intended to close the account but hadn’t gotten around to it. A call from the CRA was welcome because it made closing the inactive account very easy.
Normally, you need to complete a RC145 Form – Request to Close Business Number Program Accounts in order to close your GST account. But under the program, the CRA will close the account if you give permission over the phone.
You still have to file all your outstanding GST/HST returns and pay any amounts owing up until the day your business ends. Closing your account does not exempt you from paying GST owed. If you have business assets and shut down the operation, the assets are deemed disposed of at Fair Market Value (FMV) on the day you stopped operating. So you need to calculate the GST on the value of your assets, too.
If you sell to a purchaser who is a GST registrant and who continues to operate the business, you can jointly file a Form GST44, Election Concerning the Acquisition of a Business or Part of a Business, so the purchaser does not have to collect and you do not have to pay GST.
Once you open a GST account, it will remain open until you take action to close it. If you have a dormant GST account and the CRA is calling you, it will save you time to answer the phone and provide permission to close it.