GST is the tax small businesses most often get wrong — usually by registering late, or by spending the GST they collected. Here is how the rules actually work for a BC company.
The $30,000 small-supplier threshold
You must register for GST once your worldwide taxable revenue exceeds $30,000 in a single calendar quarter or over four consecutive calendar quarters. Below that, registration is optional.
Voluntary registration is often worth it anyway. If you sell mostly to other registered businesses, charging GST costs your customers nothing on a net basis, and it lets you recover the GST you pay on your own expenses.
Choosing a filing frequency
Annual filing is the default under $1.5 million in revenue, quarterly is required up to $6 million, and monthly above that. You can always file more frequently than required.
We usually recommend quarterly filing for growing businesses: annual filers accumulate a large balance over twelve months and are the most likely to spend money that was never theirs.
Input tax credits: what you can and cannot claim
Input tax credits let you recover GST paid on business purchases, but only if you hold a valid invoice showing the supplier's GST number. Statements and credit card slips are not enough on audit.
Note that BC's 7% PST is a separate provincial tax and is not recoverable as an input tax credit — it becomes part of the cost of the item.
- Claimable: software, professional fees, supplies, most business equipment
- Partly claimable: meals and entertainment, generally limited to 50%
- Not claimable: BC PST, GST-exempt purchases, personal-use portions
Avoiding penalties
CRA charges a penalty based on how late the return is plus interest on the unpaid balance, and it compounds daily. File on time even when you cannot pay in full — the failure-to-file cost is what escalates fastest.
The simplest protection is operational: move collected GST into a separate savings account the day it comes in and never touch it for operations.
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