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When to Register for GST?

31/08/2009


Have you started your own business and are not sure about whether you should register for GST?

You are able to voluntarily register for GST if you are carrying on a commercial activity. Either selling taxable goods or providing taxable services. If your taxable sales are less than $30,000 every year you would be considered a small supplier. What this means is that you are not required to register for GST, but can do so voluntarily.

If you have annual taxable sales greater than $30,000 in any four consecutive calendar quarters, you are required to be registered. The difference between the two is that if you are required to be registered for GST and are not, the government will treat you as if you are registered. Should you be audited you would be required to remit the GST even though you had not collected it from your customers.

There are other factors to be considered in determining when you are required to be registered, including whether you are associated with another GST registrant. As with any tax matter your specific situation should always be considered.

HST (Harmonized Sales Tax)
What about if you live in Newfoundland, New Brunswick or Nova Scotia? What sort of tax do you have to collect?

These provinces are known as the harmonized provinces, where the provincial sales tax is combined with the GST. Sales in these provinces are subject to HST at the rate of 13%. If you are registered for GST because you are carrying on business in B.C. and you have a sale to someone located in Nova Scotia, you are required to collect the 13% HST. You are automatically registered for HST if you are registered for GST and vice versa.

Any HST collected is also reported on your GST return the same way that you report your GST.

Why would you want to register for GST/HST?
Once you register for GST/HST, you are required to collect the GST/HST on all of your taxable sales. You are also able to claim input tax credits (ITCs). What this means is that in addition to remitting to the Government the GST/HST that you collected, you are allowed to deduct from this amount the GST/HST that you paid on your expenses to operate your taxable business. Sometimes, especially when you have first started a business, the GST/HST paid on your expenses may exceed the GST/HST you have collected on your sales. The volume of your sales each year will determine how often you are required to file a GST/HST return. If your annual sales are less than $1,500,000 then you only have to file a GST/HST return once a year.

The above is a very brief, simplified summary of when registration is required. Please consult your local MNP business advisor to determine the specific issues for your particular situation.