The advent of the GST (Goods and Services Tax) was a truly evil day for Canadian businesses. It's no wonder that small business owners cite the GST as a perennial headache, and politicians count on hints of repealing the GST tax as a surefire way to rejuvenate ailing election campaigns.
The GST is a 5 percent tax on most Canadian goods and services. In many provinces, there is also a Provincial Sales Tax (PST) on some goods and services. In Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario and B.C., the PST is combined with the GST, resulting in a Harmonized Sales Tax (HST) of 13 percent in all of the provinces just listed except for Nova Scotia, where the HST rate is 15% and B.C., where the HST rate is 12%.
In Quebec, the Ministère du Revenu du Québec (MRQ) administers the GST and HST for the Canada Revenue Agency. (You can contact the MRQ, toll-free, at 1-800-567-4692.)
No matter how consumers detest it and business groups rail against it, the GST appears here to stay, and most small businesses are forced to grapple with collecting and remitting the GST/HST.
Is GST Registration Necessary for Your Business?
You do not have to register for the GST if you provide only GST exempt goods and services. Examples of GST exempt goods and services include child-care services, music lessons and used residential housing.
You do not have to register for the GST if you qualify as a small supplier according to the Canada Revenue Agency (CRA), and are not one of the exceptions to the small supplier rule.
Generally, a small supplier is defined as a sole proprietor, partnership, or corporation whose total taxable revenues before expenses are $30,000 or less annually. Public service bodies, such as charities, non-profit organizations, municipalities, or universities, qualify as small suppliers if their total taxable revenues before expenses are $50,000 or less annually.
However, some businesses are required to register for the GST/HST even if they are small suppliers:
- Taxi and limousine operators
- and non-resident performers (who sell admissions to seminars and other events).
When Must GST Registration Take Place?
Basically you have 29 days to apply for GST registration from the day that your business exceeds the small supplier threshold amount.
So if on June 1st my revenues go over $30,000, I then have until June 29th to apply for registration. Note, though, that June 1st would be my effective GST registration date and I will be responsible for collecting GST/HST from that date.
How to Register for the GST
GST registration with the Canada Revenue Agency (CRA) is the easy part. You can register by phone, online, by mail or drop into your local CRA office. What's the GST Registration Process provides the phone numbers and addresses you need.
(In Quebec, remember, you need to contact the Ministère du Revenu du Québec (MRQ) instead of the Canada Revenue Agency for GST registration. Their phone number is 1-800-567-4692.)
When you've registered, you'll be assigned a Business Number, a business identification number that you'll use for all your dealings with the CRA.
Voluntary GST Registration Has Benefits
Even if you do qualify as a small supplier, you may want to register for the GST anyhow.
No matter what kind of business you're in, you will be paying GST/HST on the taxable goods and services you use in the course of your commercial activities.
If you are a GST registrant, you will be able to recover some of the GST you paid out on business purchases back through Input Tax Credits.
Continue on to the next page to learn more.