You Should Register Your Canadian Business for GST

The Goods and Services tax (GST) only applies to goods and services that are consumed in Canada. A business that has registered charges the GST on their product or service and gets a refund of any GST they pay on their business expenditures. If you are registered for GST, it is never your money. You collect GST from customers, pay GST to your suppliers and send the difference to the federal government. If you pay out more than you collect, you will get a refund.

If you have more revenue than $30,000 in a 12 month period you are required to register for the GST. However you are allowed to register to collect GST as soon as you register your business. Some businesses do not register because they do not have to. Some businesses do not register because they are not allowed to, such as daycares or residential land lords. Most of your clients are either used to paying the GST or they are businesses who get the GST back. So why would you not register?

If you are not registered for GST then everyone who deals with you knows that you do not sell $30,000 in a year. These customers may conclude that you are not very good at your work if you do not sell more than $30,000 in a 12 month period. Basically thinking that if few customers want your product then why should they? There is also a perception that a business that is not registered for the GST is operating under the table. Larger organizations will be less likely to want to deal with you if you are not registered for two reasons, one because you are apparently not doing all that well and secondly because of the possible perception that you are not operating in an ethical manner.

You are trying to make money and you do not want to do anything that causes your business to have fewer sales. Not being registered for the GST damages your reputation in the market and will lead to reduced sales. Not being registered also leads to increased costs because you will not be getting the tax refunds on the items that you purchase for your business. A business that is registered for the GST ends up paying only $100 for an item that costs $105 because they get the $5 back from the federal government. If you are not registered for the GST then you cannot get the GST refunded to you.

Registering for the GST is required if your sales are over $30,000 but registering is a smart business strategy even if your sales are less than $30,000.


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Debi J. Peverill CA is an accountant with a sense of humour. She has written 11 books for business owners and is in demand as a speaker. Learn more business strategies at www.Peverill.ca