When it comes to registering for GST there are a couple of items that will need to be addressed. Firstly, if you are a small business you don’t actually have to register for GST nor collect any GST on your invoices until you reach an average of $30,000 in sales annually.  That is of course assuming you don’t voluntarily register. Technically, even if your sales are below the $30,000 level as discussed above, you can voluntarily register. The advantage to registering of course is that you get investment tax credits back. In other words, for any expenses that the business is charged GST for, that GST paid can be recovered by the business.

Also available to you is the ability to register a GST account using the Quick method. The Quick method is the most advantageous for small businesses that do not incur many expenses. For example, you would still collect GST at 5% on your invoices, but you would only have to remit a portion of that. Using the example of $100,000 in revenue, the GST you collect on this would be $5,000. However, what you would remit to CRA will only be $3,300(first $30,000 @2.6%, next $70,000 @3.6%, rates are dependent on your industry and subject to change). This would net you an extra income that you get to keep of $1,700. This scenario would work best for you if you don’t have many expenses as discussed above. For example, under the regular method, if you have $100,000 in sales, and $50,000 in expenses, the net GST you would have to remit to CRA would be $2,500.  Clearly you can see the advantage of not electing for the Quick Method here. Generally, you can qualify for the Quick method if your annual sales average between $30,000 and $200,000. Be careful if choosing to elect under this method.

For more information you can view the following guide on the quick method as provided by CRA

http://www.cra-arc.gc.ca/E/pub/gp/rc4058/README.html

 

Secondly, you will want to be aware of the type of reporting periods you have available to choose from. You can choose a monthly, quarterly, or annual reporting period. If you are a small business, it is best to sect an annual reporting period and to also match this reporting period with your chosen fiscal year end date of the company. This will make reconciliation much easier for you and your accountant at year end. Also, this will reduce the amount of time you need to set aside for compliance. For more bigger companies, it may be more beneficial to report quarterly or monthly due to cash flow restrictions.

 

Moving on, what you also want to be made aware of before registering are your reporting obligations and failure to comply. Penalties and interest apply to both late filing and late payments. Therefore, you will need to be aware of your reporting and payment deadlines. The following link provides a summary of what you can expect.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/rtrns/pnlts-eng.html

 

Finally, a question I get asked alot is whether the goods and services a specific business provides is taxable, exempt or zero-rated. Since this is such a broad subject the following links will help you to get the answer you are looking for.

Taxable or Exempt?

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/gnrl/txbl/menu-eng.html

 

Exempt goods and services

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/gnrl/txbl/xmptgds-eng.html

 

Zero-rated (0%) goods and services

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/gnrl/txbl/zrrtd-eng.html

 

For complete information on GST, CRA provides more specific information on the above summarized items. These guidelines can be found at the following links.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/rtrns/menu-eng.html

http://www.cra-arc.gc.ca/E/pub/gp/rc4022/README.html

 

If you would like more information on the above we would gladly be able to assist you with your needs.