Anytime the government gets involved, things feel a bit more intense. It’s time to dispel those fears and get confident in your GST game. 

WHAT IS GST

There are many different kinds of taxes, so it can get VERY confusing when people start throwing around the word “taxes”. 

GST is a federal tax charged on goods and services you sell. There are some things that are tax-exempt, such as food, but generally speaking most things we buy/sell are taxable.  GST is different from corporate or personal taxes, payroll taxes, and provincial sales tax, among others, which you’ll also hear discussed.   

When do you have to register for GST? 

GST isn’t an automatic thing.  You have to register for a GST number with CRA – and you don’t HAVE to register right away. Here’s the deal: 

1. When your revenue goes over $30,000/yr you HAVE to register for a GST account and start charging GST, however; 

2. You can register VOLUNTARILY at any time if you want to charge/collect GST right from the beginning. 

The big thing to remember is that once you register for your account you NEED to start charging, tracking, and eventually reporting your GST.   

How do you Register? 

There are a few ways to create your GST Account: 

• You can call CRA and ask them to create the account for you; or 

• You can log in to your My Business Account through CRA and create your GST account; or 

• You can reach out to someone like me, and I’ll create it for you! 

When registering, you’ll need to set a start date for your GST Account.  You can backdate the account a bit if you forget to register but usually only 3-6 months back.  Anything further and you’ll need to jump through a few hoops to get it backdated fully…not impossible but just a big P.I.T.A. 

You’ll also need to set a year-end.  If you’re a sole proprietor, make your year-end December 31.  If you’re a corporation, make your year-end the same as your corporate year-end. 

You’ll also need to set a filing frequency.  If your sales are lower, annual is perfect.  If you’ve got higher sales and are collecting a thousand or more in GST each month, you might want to set it to quarterly.  You don’t HAVE to, but it will make filing (and paying) your GST much easier if you’re dealing with a $3,000 bill and not a $12,000 bill. 

Each year when you file your GST, CRA will decide it you need to file it more frequently – i.e. change from annual to quarterly, or from quarterly to monthly.  It’s all based on how much you’re earning and collecting. 

How to report your GST? 

When you register your GST account, you’ll be given a filing period…usually when you first register its set by default to annual reporting.  This means that every year you need to submit a report to CRA telling them three things: 

1. Your total sales BEFORE GST 

2. The total GST you collected (aka charged to customers on those sales) 

3. The total GST you paid to suppliers 

The great thing is that once you register you can also deduct any GST you pay out to vendors or suppliers. So, while you’re tracking the GST you’re collecting, you also want to track the GST you’re paying.  Any GST you pay out lowers the amount that YOU need to pay to the feds (aka it’s a good thing!). 

For example, if you have 100,000 in sales over the year, your GST return might look like this:

Owing CRA $2,300 is WAYYY better than owing them $5,000! 

How to pay your GST? 

Reporting is just one part of the deal; next you have to actually pay it! Paying your GST isn’t as simple as paying your personal taxes.  There (currently) isn’t a way to set it up as a payee in your online banking, but there are several ways to get them their money. 

1. If you get a letter from CRA in the mail with a remittance slip, you can take it to the bank and pay it there…but eww gross, people; so…. 

2. You can set up “Tax File Pay” through your business bank.  This is a separate system or portal that you can set up through our business bank account.  It will cost you $2 a month in fees, and your bank will often charge you to get it up ($25-$50 depending on the bank).  Once set up, however, you can pay any government taxes. 

3. In your My Business Account through CRA, they now have the option to set up a direct withdrawal from your bank account.  You’ll enter your bank number, transit number, and account number.  Once set up, tell them how much you want to pay and when you want to pay it…super easy. 

GST Key to Success 

GST is not your money.  Let me say that again…GST is NOT yours.   

The worst part of dealing with GST is worrying about having enough money to pay the bill. 

The best advice I can give you is: get that GST money out of sight and out of mind so you don’t ever think it’s yours.  I’ve got 4 savings accounts; one is for taxes (check out this post for my savings system).  Every Monday I total up the money brought in over the past week and move 3% of it to that “taxes” account.   

Why 3%?  Isn’t GST 5%? Yes it’s true, but I’m banking on payout OUT a bit in GST so I won’t have to remit the entire 5%. 

Now get your savings accounts set up and start rocking this GST thing! You’ve got this!