If you register for GST/HST as a non-resident without a permanent establishment in Canada, the CRA requires you to post security: 50% of your estimated net tax for your first 12 months, with a minimum of $5,000 and a maximum of $1 million. Plenty of smaller sellers escape it through a waiver, and everyone else faces a choice between tying up cash and buying a bond. Here’s how the deposit actually works, and where sellers get caught.
Who has to post security
The requirement applies to non-residents who register for GST/HST without a permanent establishment in Canada. It’s a condition of registration, so the file doesn’t finish processing until security is in place. And it has teeth afterward too: if required security isn’t maintained, the CRA can hold back GST/HST refunds you’d otherwise be paid, up to the shortfall.
The deposit isn’t a tax and it isn’t a fee. It’s collateral the CRA holds while your account is open, returned when the account closes less anything you owe.
How the CRA calculates the amount
For your first year, the amount is 50% of your estimated net tax for the 12 months after registration. Net tax is roughly the GST/HST you collect on your Canadian sales minus the input tax credits you’re entitled to claim, including the GST you pay at the border on imported inventory. The calculation uses the absolute value, so a refund position counts too: if you expect a $12,000 net refund because of GST paid at the border, the math still produces $6,000 of required security.
The floor is $5,000 and the ceiling is $1 million, in Canadian dollars.
The estimate is yours to make, and that’s the part I’d treat carefully. The CRA can ask how you arrived at the number, so keep a written calculation you can produce later. After the first year, the amount is reviewed annually against 50% of your actual net tax for the previous 12 months, and it can move in either direction.
The waiver most small sellers use
No security is required if your taxable sales in Canada will be $100,000 or less annually and your net tax will fall between $3,000 remittable and $3,000 refundable. Both conditions have to hold, and they cover a lot of early-stage sellers.
Here’s the trap: the waiver rides on estimates, and estimates go stale. A seller who qualified at registration and then doubled their Canadian sales can find the CRA asking for security at the annual review, right when the cash is already committed to inventory. If growth is the plan, price the deposit into it.
Cash or bond: what the CRA accepts
Acceptable security is cash, certified cheque, money order, or a qualifying bond. A qualifying bond means a transferable bond guaranteed by the Government of Canada, or a surety bond issued by a company approved to write that class of business in Canada. Non-transferable bonds such as Canada Savings Bonds are not accepted, and the CRA doesn’t take security deposits by wire transfer.
Cash and cash equivalents carry a quiet downside: when the security is eventually released, the CRA can apply those funds against any other balance you owe first. A surety bond keeps your capital in the business, and the annual premium usually costs far less than parking cash with the CRA for years. That’s the route we’d point most sellers toward.
Getting the deposit back or reduced
The CRA holds the security for as long as the account is open. If your circumstances change, you don’t have to wait: a business that later has a permanent establishment in Canada can ask the CRA to review the requirement, and the annual review can shrink the amount if your actual net tax came in lower than the original estimate.
When you close the account, the security is released after your final returns are filed and any balance is paid.
Frequently asked questions
Is the GST security deposit refundable?
Yes. It’s security, not a payment of tax. The CRA holds it while you’re registered and releases it when the account closes, net of anything you owe.
Can I send the security deposit by wire transfer?
No. The CRA doesn’t accept wire transfers for non-resident security deposits. You’ll need a cash equivalent such as a certified cheque or money order in Canadian dollars, or a qualifying bond.
What if my Canadian sales stay under $100,000?
If your taxable sales in Canada are $100,000 or less annually and your net tax stays between $3,000 remittable and $3,000 refundable, no security is required. Outgrowing either number puts the deposit back on the table.
Do I still need security if I get a permanent establishment in Canada?
The requirement targets non-residents without a permanent establishment. If you later have one, you can ask the CRA to review whether security is still required at all.
Related guides
- GST registration for non-residents: how it works
- Amazon FBA Canada GST/HST for non-resident sellers
- CBSA CARM Client Portal: setup guide for importers
- PST for US and non-resident sellers
- See how our non-resident GST/HST service works
Not sure what you’d owe?
We handle non-resident GST/HST registrations end to end, including the net tax estimate behind the security calculation, the waiver where it applies, and the bond route where it doesn’t. Get in touch with what you sell and where you ship from, and we’ll tell you what the CRA will expect before you commit any cash.
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