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Goods & Services Tax (GST)

You have to register for GST if:

  • You are providing taxable goods or services in Canada in the course of your commercial activities in Canada.

  • Your total (gross) worldwide taxable revenue, including the taxable revenues of all your associates, in the immediate preceding four consecutive calendar quarters is more than $30,000 (this includes revenue from most zero-rated good and services) or exceeds $30,000 in one calendar quarter.

While you do not have to register if your taxable revenue is $30,000 or less you may be eligible to do so voluntarily.  Generally, you cannot register for GST if you are providing only exempt goods and services.

As a registrant you charge GST on the goods and services you provide that are taxable at 5%.  You can claim a credit called an input tax credit (ITC), to recover the GST you paid or owe on purchases and expenses you use in your commercial activities.

There are generally three sections of GST that businesses fall into:

Tax Exempt

Taxed at Zero (zero-rated)

Taxed at 5%

Tax Exempt:

Businesses who are exempt cannot charge GST on sales or claim GST paid on expenses back from the government.  If a business is involved in an exempt income activity only, they are not required to register for GST.  Some examples of GST exempt activities are residential rents and most medical services.

Taxed at Zero (zero-rated):

Businesses who are taxed at zero do not charge GST, but can claim GST paid on expenses back from the government.  Some examples of activity that is taxed at zero include some grocery and farming activities.

Taxed at 5%:

Businesses who are taxed at 5% both charge GST and claim GST paid on expenses back from the government.  Most businessess fall into this category.

Reporting Periods:

Businesses must calculate their net GST remittance or refund on a periodic basis: monthly, quarterly or annually, depending on sales volumes.  The basic reporting period is the fiscal year of the business.  Businesses can choose either the calendar year or their taxation year as their fiscal period.

All businesses whose total annual sales exceeds $6 million must file a monthly return.  Businesses with sales between $1.5 million and $6 million must file a return every quarter and may elect to file monthly if desired.  Businesses with $1.5 million or less in total sales must file and annual return with quarterly instalments.  It should be noted that quarterly instalments are not required by CRA where net GST remittable is less than $3,000 in total for the year.  Annual filers may also choose to file on a quarterly or monthly basis.

 

 

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