Registering for a GST number: Do I really need one?

In my opinion, the answer to that question is YES!

maple leaf The Canada Revenue Agency does not require you to register for a GST number if:

You are a small supplier and you meet one of the following conditions:

■ you are a sole proprietor and your total revenues from taxable supplies (before expenses) from all of your businesses are $30,000 or less in any single calendar
quarter and in the last four consecutive calendar quarters; or

■ you are a partnership or a corporation and your total revenues from taxable supplies (before expenses) are $30,000 or less in any single calendar quarter and in the
last four consecutive calendar quarters; or

■ you are a public service body (charity, non-profit organization, municipality, university, public college, school authority, or hospital authority) and your total
revenues from taxable supplies from all of the activities of the organization are $50,000 or less in any single calendar quarter and in the last four consecutive calendar quarters. A gross revenue threshold of $250,000 also applies to charities and public institutions. For more information, see Guide RC4082, GST/HST Information for Charities.

In all of these cases, if you do not have a GST number then you will not charge or collect GST on any of your revenue.

GSTAlthough generally, you do not have to register for GST if your revenues are $30,000 or less per year, you can register voluntarily.  I often recommend to my clients who are just starting up a new business that they do voluntarily register for their GST number. Why?

These are the reasons I give:

  • Even if you do not anticipate that your business will reach the $30,000 revenue mark in the first year, everyone starts a business with the intent that someday it will grow. As your business grows and you begin to reach that level of sales, you will need to apply for your number at a later date anyway.  It is easier and more beneficial to you to apply now rather than later.
  • money backEspecially in the start up stages of a new business, there can be huge expenses when getting a business off the ground – even before the revenue starts coming in.  You may find yourself making large purchases for equipment, inventory, office supplies & furniture, rent, etc.  If you have voluntarily registered for a GST number, you are eligible to claim the GST you spent on those items (that GST is referred to by CRA as Input Tax Credits or ITCs) and receive a refund or credit.  At that stage, getting that GST  back can mean a lot to the balance of your bank account. If you can get back some of what you spent, then why wouldn’t you?  If you choose to apply later, you will not be allowed to go back in time to claim that GST paid.  It will be money lost. You can only begin claiming those ITCs from the date your GST number takes affect.
  • You may come across some clients who will only do business with other businesses who have registered for GST.

If you decide to register voluntarily, then you have to charge, collect and remit GST on your sales of goods and services.  You will have to file GST returns on a regular basis.  You will also have to stay registered for at least one year before you can cancel your registration (unless you stop your commercial activities).

If you decide not to register, then you cannot charge GST to your customers and the GST you pay on your business purchases becomes a cost for which you cannot claim ITCs.



About Cougar Ridge Bookkeeping

We know that to be successful in business, keeping good records is vital. We also know that operating a successful business takes hours of dedication and hard work. For many, it means that the bookkeeping gets put on the "to-do list". We are here to help you!
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