As a small business owner, understanding your tax obligations is crucial to avoid any penalties or fines from the Canada Revenue Agency (CRA). One important concept that small business owners need to know is the definition of a “small supplier” for GST/HST purposes. In this blog post, we’ll go over everything you need to know about small suppliers in Canada.

What is a Small Supplier?

According to the CRA, a small supplier is a business whose worldwide taxable sales are less than $30,000 in a calendar quarter and over the last four consecutive calendar quarters. If your business qualifies as a small supplier, you are not required to register for a GST/HST number or collect and remit GST/HST on your taxable supplies. However, you can voluntarily register for a GST/HST number to take advantage of input tax credits (ITCs).

How to Determine if Your Business is a Small Supplier?

To determine whether your business is a small supplier, you need to calculate your worldwide taxable sales. This includes all supplies made in Canada, as well as exports, zero-rated supplies, and exempt supplies. You must also include the taxable supplies made by any associates, such as your partners or related corporations.

If your worldwide taxable sales were less than $30,000 over the last four consecutive calendar quarters and the current calendar quarter, you qualify as a small supplier. However, if your worldwide taxable sales exceed $30,000 in any single calendar quarter or over the last four consecutive calendar quarters, you must register for a GST/HST number and collect and remit GST/HST on your taxable supplies.

Voluntary Registration for Small Suppliers

Even if your business qualifies as a small supplier, you can voluntarily register for a GST/HST number. This may be beneficial if your business incurs significant expenses that include GST/HST. Voluntary registration allows you to claim ITCs to recover the GST/HST paid on these expenses.

Additionally, registering as a GST/HST collector can give your business credibility and may help you win contracts with larger businesses that require their suppliers to be registered for GST/HST.

Conclusion

Understanding the concept of a small supplier is important for any business owner in Canada. If your worldwide taxable sales are less than $30,000 over the last four consecutive calendar quarters and the current calendar quarter, you qualify as a small supplier and are not required to register for a GST/HST number or collect and remit GST/HST on your taxable supplies. However, you can voluntarily register for a GST/HST number to take advantage of ITCs or to gain credibility with potential customers. It’s important to keep track of your taxable sales to ensure compliance with CRA regulations.