Tax Identification Number (TIN): What is it and does my business need one?

What is a Tax Identification Number (TIN)?

A Tax Identification Number (TIN) is a general term used internationally to refer to a set of numbers that individuals and businesses use for tax purposes. While the Canada Revenue Agency (CRA) doesn’t specifically refer to TINs, the Canadian equivalents are the Social Insurance Number (SIN) for individuals, the Business Number (BN) for businesses, and the Individual Tax Number (ITN) for non-residents who need to file Canadian taxes. These identifiers are essential for filing taxes, reporting income, and conducting financial transactions with the CRA.

All registered businesses in Canada must obtain a BN for tax filing and reporting purposes. Employers must also ensure that their employees have a valid SIN before employment begins.

Below, we’ll cover the three main types of TINs in Canada (SIN, BN, and ITN) and how to obtain one. We’ll also discuss their importance for legal compliance, tax reporting, and business transactions.

In summary:

• A Tax Identification Number (TIN) refers to the unique identification numbers used for tax purposes in Canada. These include the Social Insurance Number (SIN) for individuals, the Business Number (BN) for businesses, and the Individual Tax Number (ITN) for non-residents.

• All registered businesses in Canada must obtain a BN from the CRA. Employers must ensure their employees have a valid SIN or ITN before starting employment.

• The BN is essential for tax filing, payroll, and business transactions.

What are the types of Tax Identification Numbers in Canada?

In Canada, there are three primary types of Tax Identification Numbers, each serving different categories of individuals and entities:

Social Insurance Number (SIN)

The SIN is issued to Canadian citizens, permanent residents, and some temporary residents (such as workers and students). This nine-digit number is required for tax filing, accessing government services, and conducting various financial transactions. It serves as the individual’s TIN for income tax purposes.

Business Number (BN)

The BN is a unique number assigned to businesses and other organizations by the CRA for tax purposes. Businesses must have a BN to file taxes, manage GST/HST, payroll deductions, and conduct import/export activities. Every registered business in Canada must have a BN, from corporations to sole proprietorships.

Individual Tax Number (ITN)

The ITN is issued to individuals who aren’t eligible for a SIN, including non-residents and individuals without Canadian citizenship, who still need to fulfill tax obligations. The ITN allows these individuals to file Canadian tax returns and engage in financial transactions.

Do I need a TIN for my business in Canada?

If you’re starting a business in Canada, you’ll need to apply for a BN, which serves as your business’s TIN. This number is necessary for tax filing, payroll, and other business-related activities. Even sole proprietors generally need a BN to collect GST/HST or hire employees.

Do I need a TIN for my employees in Canada?

Before hiring, employers must ensure their employees have a valid TIN, typically a SIN. This is crucial for tax reporting and payroll purposes. Employers must use the employee’s SIN when reporting wages and making payroll deductions to the CRA.

How to get a TIN in Canada

• SIN: Canadian citizens and permanent residents can apply for a SIN online through Service Canada. Temporary residents can apply for a SIN with proof of their temporary status (such as a work or study permit). The SIN is often issued at birth for Canadian citizens.

• BN: Businesses and other entities can apply for a Business Number (BN) directly through the CRA. The process is free and can be done online or by phone. You will often automatically be assigned a BN when completing other business registrations. For example, you will receive a BN if you:

  • Register your business online using the Business Registration Online (BRO) portal

  • Sign up for CRA program accounts such as Goods and Services Tax (GST)/Harmonized Sales Tax (HST) or Payroll deductions

  • Incorporate your business federally

  • Register or incorporate your business in certain provinces, including:

    • Alberta

    • British Columbia

    • Manitoba

    • New Brunswick

    • Nova Scotia

    • Ontario

    • Prince Edward Island

    • Saskatchewan

• ITN: Non-residents and others who aren’t eligible for a SIN can apply for an ITN by submitting Form T1261 to the CRA and proof of identity. This number is used to fulfill Canadian tax obligations.

Once obtained, the TIN (whether SIN, ITN, or BN) generally remains valid indefinitely. However, ITNs may expire if they aren't used for several years and SINs for temporary residents have expiry dates aligned with their residency status.

Are TINs expensive to get in Canada?

Obtaining a TIN in Canada is free. Canadian citizens and residents receive their SINs at no cost, and the CRA does not charge fees for assigning a BN or an ITN to individuals or businesses. However, costs may be involved if you hire a third-party service to assist with the application process.

Why is it important to get a TIN?

A TIN is essential for individuals and businesses to fulfill their tax obligations and comply with Canadian tax laws. Here are a few reasons why your business should obtain a TIN:

To maintain legal compliance

Having a TIN ensures compliance with tax laws. For example, if you operate a retail business in Ontario, your BN allows you to register for GST/HST and ensures your business complies with federal and provincial regulations.

To report taxes

A TIN is required for all tax-related matters, from filing personal income taxes to reporting business revenue and expenses. It serves as a unique identifier with the CRA and other government agencies.

To make business transactions in Canada

A TIN is necessary to open a business bank account. For instance, if you're expanding your business and need to secure a loan from a Canadian financial institution, having a BN is critical for completing the application process smoothly.

How can Airwallex support your international business expansion?

If you're expanding your business internationally, having a TIN is necessary to open bank accounts and access financial services. For example, if you need to send money to a supplier in the US or receive payments from clients in Europe, Airwallex can help streamline your global financial operations with a business account, multi-currency payment solutions, and expense management tools. Once you have a TIN, you can open an Airwallex Business Account to start accepting payments and making cross-border transactions in multiple currencies, all while complying with local tax regulations.

Create your Airwallex Business Account today to simplify your international operations and manage your financial needs.

FAQ

Are Tax Identification Numbers essential for businesses in Canada?

Yes, TINs are necessary for businesses to comply with Canadian tax laws. All businesses need a BN to file taxes and conduct transactions with federal and provincial governments.

Are there alternatives to Tax Identification Numbers in Canada?

No, TINs are Canada's only acceptable identification numbers for tax purposes. Individuals must provide a SIN or ITN, and businesses must use a BN to fulfill their tax obligations.

Are Tax Identification Numbers expensive to get?

No, obtaining a TIN (whether SIN, ITN, or BN) is free in Canada. Most individuals and businesses can apply directly through Service Canada or the CRA without any additional fees.

What if my SIN is lost or stolen? If your SIN is lost or stolen, contact Service Canada immediately to take steps to protect your identity and apply for a new one.

How long does it take to get a BN or ITN? Applying for a BN online is usually processed instantly, while ITN applications can take 4 to 6 weeks.