Virtually all businesses in British Columbia which sell goods or services must collect goods and services tax (GST) from purchasers of those goods and services. However, an exemption is provided for businesses whose taxable sales for a single quarter or over the previous four quarters total less than $30,000. Such businesses are known as “small suppliers”, and they are not obligated to register for GST purposes. Such businesses may, however, register voluntarily, in order to be able to claim input tax credits on the GST they pay on their own purchases. Where such voluntary registration is done, the business must then remit GST amounts collected on its own sales of goods and services to the federal government.
However, once taxable sales of a business in a single quarter or over the previous four quarters reach the $30,000 threshold, registration for GST purposes becomes mandatory. A gap in the law, however, has meant that businesses which did not register as required could not be compelled to do so.
That gap was closed by a measure announced in this year’s federal Budget. The new rule gives the Minister of National Revenue the discretionary authority to register and assign a GST registration number where a person fails to comply with the requirement to register, even after receiving notification of that requirement from the Minister.
The Canada Revenue Agency (CRA) intends to administer the new provision, in the first instance, on a reminder basis. Businesses which are non-compliant will be contacted by the CRA on an informal basis and reminded of their obligation to register. Where registration does not take place, the CRA will then issue a formal notification indicating that the person will be registered for GST purposes effective 60 days from the date of the formal notice.
Once a business is registered for GST purposes, certain obligations follow, whether the registration is done voluntarily or by the Minister as the result of a business’s failure to register. Businesses which are registered for GST purposes must charge and collect GST from their customers or clients, and must remit the required GST amounts to the federal government, together with a GST return, on a prescribed schedule. Details of the GST remittance and filing obligations imposed on Canadian businesses can be found on the CRA website at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.