Asked
Hello! I've done some research about claiming Input Tax Credits ( ITCs) and charging GST. I'm feeling very overwhelmed with the different information & would appreciate some insight.
I have questions for small businesses/ sole proprietorships.
*Located in BC
1)If my consulting services income will be under the $30K threshold. Do I need to register as a sole proprietor if I want to charge GST on services provided?
2) My home is literally my office, can I claim ITC's (home/business expenses) during the tax year return even if I'm NOT a GST registrant?
3) If I foresee passing the 30K income, is it best to register for a GST account from the beginning to avoid owing CRA?
FYI, I will reach out to an accountant but wanted to hear from others as well!
Thank you
Clint’s answer
1. $30,000 threshold is often misunderstood as it is in a 4 consecutive quarter period, which most people understand as only Jan 1 to Dec 31. If you make $16,000 in the last two quarters of one year and then 15,000 in the next two quarters of the following year, then you are obligated to apply for and charge GST starting in the very next quarter. (July 1).
2. Not possible to claim ITCs without a GST registration. They literally go into the GST filing with the GST business number. (Some businesses do not collect GST but are registered and receive refunds for ITC)
3. Financially, it is better to register asap if the application is accepted. Some aren't, because they don't earn enough money and aren't necessarily expected to. GST is an excise tax, and businesses do not pay GST. This is why ITCs exist. It is a full refund for all GST spent on producing income for a business, and if a business isn't making $30k, the government doesn't want to give a full refund for GST. If you are not registered, you aren't getting the full refund.
Hope this helps!
February 3, 2025
Update, October 2026: On point 1, the timing is more specific. Go over $30,000 across four consecutive quarters and you stop being a small supplier at the end of the month after the quarter you crossed it in, and you have 29 days to register. Go over $30,000 in a single quarter and you charge GST on the sale that put you over.
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms