GST Canada: Why Your Small Business Should Register for GST

In Canada, GST (Goods and Services Tax) does not have to be charged and collected by everyone who sells goods and services.

GST in Canada does not have to be charged, collected and remitted if your business qualifies as a GST exception.

Your business will also not have to charge and collect GST in Canada if you qualify as a small supplier, meaning, in essence, that you make $30,000 or less annually and are not engaged in one of the business activities or professions that always has to register for and charge GST no matter what, such as taxi and limousine operators and non-resident performers.

However, even if you do qualify as a small supplier, you may want to register for GST anyhow, because if you're not a GST registrant, you won't be able to claim any Input Tax Credits and get back the GST you've paid out in the course of doing business.

The bottom line is that if your business involves paying out GST in Canada on supplies that you are consuming in the course of your business, you should register for GST in Canada even if you make less than $30,000 so you can at least get back the GST you are paying out for business purchases.

How to Register for GST Canada.

Note that PST (Provincial Sales Tax) is governed by entirely different rules.

You have absolutely no choice. If you live in a province that has a provincial or retail sales tax (as PST is sometimes called) and the goods or services you sell are not PST/RST exempt, you have to register for, collect and remit it. It's not a matter of having to make a particular amount of sales or revenue before you have to register.

How To Charge & Remit The Retail Sales Tax In Ontario explains the basic process using the example of a small retail business in Ontario. This provincial sales tax explanation also applies to small businesses in B.C., Saskatchewan and Manitoba.

Note too that this will change in July 2010 when both Ontario and B.C. adopt an HST (Harmonized Sales Tax) system.

Provincial Sales Taxes provides links to provincial tax information for particular provinces.

More on GST/HST and PST/RST

• Starting a Business: Register for the GST explains how GST/HST works and the GST/HST registration process.

• Common Questions About the GST/HST is a handy guide to the ins and outs of charging the GST, filing and remitting the GST, and dealing with the GST as a non-resident.

• The PST (RST) for Small Businesses explains how Provincial Sales Tax works.

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