Ask An Expert
Is HST charged and claimed if business makes under $30,000?
Expert: Lloyd Lindsay
Marion asked:
Do I have to charge HST and claim it if my business makes under $30,000?
Lloyd Lindsay answered:
Most, but not all, businesses must register for the GST or HST. However, there are two exceptions:
- Businesses that provide "exempt" goods and services, and
- “Small suppliers.”
Suppliers who provide “exempt” supplies do not have to register. These suppliers do not charge GST/HST on their sales, but must pay GST/HST on their purchases when applicable. Generally, “exempt” supplies include the following:
- certain types of real property (eg. residential rents)
- health care services (some cosmetic surgery may be taxable)
- educational services
- child and personal care services
- legal aid services
- supplies by charities
- public sector body services
- financial services (includes insurance)
Not all goods and services in these categories are exempt and you should look to Schedule V of the Excise Tax Act to learn more about which supplies in these categories are taxable. Also, you may want to consider consulting a tax professional if you provide goods and services in one of these categories.
WHAT IS A “SMALL SUPPLIER?”Generally, a business qualifies as a “small supplier” if its total revenues from taxable supplies (before deducting expenses) do not exceed $30,000 ($50,000 for public service bodies):
- in a single calendar quarter, or
- over four consecutive calendar quarters (12 months)
If you exceed the limits, you are no longer a “small supplier” and must register for GST/HST. An individual who owns two or more unincorporated businesses must add the total “taxable supplies” sold by them in determining whether the limits were exceeded. If they were, the individual must register under his/her name, and the single registration would apply to those businesses.
SHOULD I REGISTER IF I QUALIFY AS A “SMALL SUPPLIER?”If your business qualifies as a “small supplier,” registration is optional. Here are a few questions you might want to ask your accountant:
- How much GST/HST that I pay to my suppliers can I recover if I register?
- Are most of my customers registered and eligible for a refund of the GST/HST I charge them, or are they ineligible?
- What are the additional accounting and administrative costs I might incur if I delay registration and sales volumes suddenly increase?
- What business image do I have if I am not registered?
- Will I lose customers by not being registered?
After reviewing the above questions, many businesses do register.
About the author
Lloyd Lindsay is a CA, a licensed Public Accountant, and a Certified Management Consultant. He completed the CICA In-Depth Tax Course in 1985 and has been in public practice for over 40 years. Also, from time to time, he teaches on a contract basis.
Lloyd is a member of the Personal Computer Club of Toronto and has hosted its Microsoft Office Special Interest Group for many years.
In addition to providing tax, accounting, and auditing services, Lloyd provides presentations on those topics and on using accounting software, PowerPoint, and MS Office programs.
