For the past few years, I have been doing business as a sole proprietorship and working under my own name (I do not currently have a business number). Over this time, I have accumulated an inventory of items (mostly automotive parts and accessories) that have been purchased for resale.
I will be registering for HST in the next few months, as I will no longer qualify as a "small supplier" in the next quarter. To register for HST, it looks like I will need to register my business and obtain a business number first. Is this correct?
If so, will this affect how I go about claiming an ITC on the inventory that I still have on hand at the time of registering for HST?
I am wondering about this because I am not sure if I will need to treat the business as a new business after registering and obtaining a business number, or if I can continue using the same information from my T2125 for the previous year before the business was registered (such as carrying over the closing inventory from before my business was registered and I was working under my own name... to the opening inventory for my business after obtaining a business number).
If I can do this, then I believe I should be able to claim an ITC on my inventory expenses paid prior to registering for HST (for inventory items that I still have on hand), since the CRA states the following: "If you are a new registrant, you may be able to claim an ITC for the GST/HST paid or payable on property such as capital property and inventory that you have on hand on the day you register."
I would appreciate some help in clarifying what the correct way would be to go about claiming an ITC on old inventory in my situation, and/or if registering my business will affect how I need to go about doing this. Thanks.
The CRA considers that you bought the inventory at the time of your registration at its current fair market value, and you are entitled to an ITC reflecting the GST/HST that would have been paid on that value on that day. This rule does not apply to services retained prior to becoming a GST/HST registrant. Here's a link for more information: https://quickbooks.intuit.com/ca/resources/taxes/claim-input-credit-inventory-on-hand-gst-registrant...
The CRA considers that you bought the inventory at the time of your registration at its current fair market value, and you are entitled to an ITC reflecting the GST/HST that would have been paid on that value on that day. This rule does not apply to services retained prior to becoming a GST/HST registrant. Here's a link for more information: https://quickbooks.intuit.com/ca/resources/taxes/claim-input-credit-inventory-on-hand-gst-registrant...
Thank you for the reply.
One of the main reasons I was wondering about this is related to the name of the business. Since I was working under my own name, I currently have the "Name of Business" in the "Business Summary" section on TurboTax Online set as my own legal name. I assumed that I would need to use my own name as the name of the business since I did not have a registered business name. Am I correct in that assumption, or could I enter a different name, even though the name wasn't registered?
If the business name must be my legal name as long as I don't have a registered business, and if I decide to register the business to obtain a business number using a different unique name for the business, can I simply change the name of the business in the year of registration once the name has been registered and still preserve all my business info from the previous year? (given that I am not incorporating)