GST is one of the first tax walls every growing business hits - and one of the most misunderstood. Here's how it actually works for a BC small business.
The $30,000 threshold
You're a "small supplier" - and registration is optional - until your worldwide taxable revenue passes $30,000 over any four consecutive calendar quarters (or in a single quarter). Cross the line and you must register; in the single-quarter case you're collecting GST on the very sale that put you over. This is a rolling test, not a calendar-year one, and it's the detail that catches most people.
What you charge in BC
BC is not an HST province: you charge 5% GST federally, and separately may need to register for and charge BC PST (7%) depending on what you sell. The two systems have different rules and different registrations - services that are PST-exempt may still carry GST, and vice versa.
Input tax credits: the upside
Once registered, the GST you pay on business purchases - software, equipment, rent, professional fees - comes back to you as input tax credits (ITCs), netted against the GST you collected. This is why voluntary registration below $30,000 sometimes makes sense: startups with big purchases and business-to-business customers can recover meaningful cash.
Filing and paying
Most small businesses start as annual filers (return due June 15 for sole proprietors, payment April 30), but you can elect quarterly or monthly filing - often better for cash flow discipline. Once your annual net GST passes $3,000, CRA expects quarterly instalments even from annual filers. Miss those and interest accrues quietly.
The Quick Method
Service businesses with limited expenses should ask about the Quick Method: you charge 5% as usual but remit a reduced flat rate on revenue instead of tracking ITCs line-by-line. For many consultants and trades it's both simpler and cheaper - but you have to elect it, and it isn't right for everyone.
Common traps
- Registering but never filing (CRA assesses you arbitrarily - always worse than reality)
- Spending collected GST as if it were revenue - it's CRA's money in your account
- Claiming ITCs without proper receipts showing the supplier's GST number
- Missing the PST side entirely because "we registered for GST"
Get it set up right once
GST setup decisions - when to register, what frequency, Quick Method or not - are cheap to get right at the start and expensive to unwind later. Book a free consultation and we'll sort out registration, filing, and catch-up if you're behind.