Herbert & Company - Certified General Accountant


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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 calender quarters is more than $30,000 (this includes revenue from most zero-rated goods and services) or exceeds $30,000 in one calender 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 activites 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 groceries 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 businesses 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 calender 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 of between $1,500,000 and $6 million must file a return every quarter and may elect to file monthly if desired. Businesses with $1,500,000 or less in total sales must file an annual return with quarterly installments. It should be noted that quarterly installments 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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