What You Need To Know About A G.S.T. Number As A Business Start-Up
Posted On: 29/07/21 - 0

If you have been thinking about starting a business here in Alberta, you likely are wondering about a G.S.T. number.  What is it, when do you get one? When do you start collecting and remitting?

What is a G.S.T. Number?

It is a goods and services tax (G.S.T.) number that is a unique tax identification number issued to your business by the Canada Revenue Agency (CRA). You will also use your G.S.T. number when you collect payment for your service.. Once you have been issued a number, you are required to show it on your invoices.

When Do You Get A G.S.T. Number?

The quick answer is when you have hit the $30,000 mark. This means you have generated:

  • $30,000 in a single calendar quarter or
  • $30,000 within the previous four consecutive calendar quarters (not a calendar year).

As soon as your business makes $30,001 in a single quarter or in the last four quarters combined, you are required to register for GST right away and begin to charge, collect and remit the tax.  Once you hit $30,001 in sales you need to include GST.

What about Before You Hit That $30,000 Threshold?

In some cases, voluntarily registering for the GST makes sense, even if you are not at the 30K threshold yet. One reason is to get a head-start on proper bookkeeping. It is not mandatory to collect GST on sales prior to the magic mark.  However,  ITC’s (input tax credits) can be claimed. This means if you have to spend a lot of money up front to get your business off the ground, you would be entitled to a refund of GST paid (if you have already been assigned a tax number). That extra revenue back is a real help because generally speaking, there is very little revenue in that first year.

Compliance

After you have registered for the GST number, and begin collecting and charging that 5% tax, you are required to let your customers know that GST is added. (This can be added to your invoice along with your number). 

You also need to complete and submit a GST return. Depending on your business, you need to submit a return either monthly, quarterly or just once a year. The GST amount that you have collected are funds that you have taken from clients and must be remitted to the CRA along with the return. 

Filing Your G.S.T. Return

You can access line-by-line explanations, video instruction, etc.

For all of your taxation and small business needs, call us, your small biz pros.

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