THE $30,000 RULE

There is always confusion on whether a business needs to set up a GST/HST account. Just because your business is earning money, it doesn’t necessarily mean that you need to set up a GST/HST account with Canada Revenue Agency (CRA).
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If your business does charge GST/HST to its customers on services/products sold, the business is required to remit these funds to the CRA. You will also be eligible to claim the GST/HST your business pays on business related expenses, these are called input tax credits (ITCs).

The $30,000 Rule 
This rule is often the beginning of the confusion. If your business makes less than $30,000 in a total of 4 consecutive calendar quarters, you are considered a small supplier and are not required to open a GST/HST account. You would not charge this GST/HST to your customers.

Once your business makes revenue of $30,000 in 4 consecutive calendar quarters or less you are no longer considered a small supplier and are required to open your GST/HST account and begin charging GST/HST to your customers.

Here are the three scenarios that are most common and help you understand when you are no longer considered a small suppler and must open a GST/HST account.

​See the scenarios in the below table to determine if you are a small supplier:

Scenario

If

Then

What you need to do

1.

You do not exceed $30,000 in revenue in four consecutive calendar quarters.

You are a small supplier

You are not required to register a GST/HST account

2.

You exceed $30,000 in revenue in a single calendar quarter.

You are not a small supplier. You are no longer a small supplier on the sale that made you exceed $30,000 in revenue

You must start charging GST/HST on the sale that made you exceed the $30,000 revenue threshold. You must register within 29 days from the day you are no longer considered to be a small supplier.

3.

You exceed $30,000 in revenue within the previous four consecutive calendar quarters (but not in a single calendar quarter).

You are no longer a small supplier at the end of the month following the quarter where you exceeded $30,000 in revenue.

You must start charging GST/HST at the beginning of the month after you are no longer considered to be a small suppler. You must register within 29 days after you make a sale when you are no longer considered a small suppler

Other Reasons to Register for a GST/HST Account
Even if you have not reached the $30,000 threshold there are still other reasons you may want to register for an account:

• If your business plans on being your full time gig I'm guessing your plan is to make over $30,000, by setting one up at the beginning you save yourself from needing to track when you hit the threshold.
• Again, if your goal is to make over $30,000, you may want to save customer confusion by having consistent pricing from the beginning. Customers may get confused when the rates are one thing one day and change the next.
• Often times at the beginning of a business, you are spending (investing) a lot but not quite making the sales. If you register your account in the beginning you are able to take advantage of the HST credits on the purchases you make.
• If your business is more of a hobby and you never plan to hit the $30,000, there isn't any need to register an account.

I hope this was of help to you. Let me know if you have any questions.

Jennifer H.
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