GST is a tax charged on most goods and services purchased in British Columbia. GST is charged on the gross sale price of the item or service before PST. A Business also gets to claim as input tax credit (“ITC”), the GST it pays out in operating its business. For example, GST paid on rent, computers, business cards, accounting fees, etc. are all refunded back to the business when it calculates its net GST owing to CRA every reporting period.
GST affects almost every business owner in British Columbia. The following lists some of current GST reporting rules.
• Businesses with $30,000 or less in annual sales still have the option to be non-registrants. This threshold amount has not changed. The disadvantage to being a non-registrant is the GST on expenses cannot be claimed as a credit against the GST collected.
The Quick Method – small businesses with worldwide annual taxable sales of $400,000 or less can now use the Quick Method to report and remit GST to CRA. Note that the $400,000 includes zero rated sales and the GST collected on taxable sales. This is a change that came into effect in 2013. The old threshold was $200,000 which resulted in many professionals not qualifying. The old rules on who is eligible for the Quick Method still apply.
• Businesses with $1.5 million or less in annual sales are assigned an annual reporting period. The old threshold was $500,000. Annual reporting instead of quarterly means you only have to do the meticulous accounting for GST once a year instead of once a quarter. The business of course stills need to make quarterly installments the month end following the quarter. The business has the option to report quarterly or even monthly. If so, the filing and payment are due the month end following the reporting period.
• Businesses with greater than $1.5 million to $6 million in sales are assigned a quarterly reporting period. The business also has the option to report monthly. The filing and payment are both due the month end following the reporting period.
• Businesses with sales greater than $6 million in sales are assigned monthly reporting period. The filing and payment are due the month end following the reporting period.
• Exception to the above reporting rules: proprietors who file annually – the GST return is due on June 15 but the payment is due on April 30.
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