Did you know that some businesses in Quebec are not required to collect taxes from their customers?
Businesses and self-employed individuals with small supplier status are not required to register for the Goods and Services Tax (GST) and Quebec Sales Tax (QST). This alleviates the workload of SMEs when it comes to business accounting.
In this article, learn more about small supplier status in Quebec and find out whether you qualify!
Businesses that qualify for small supplier status in Quebec
In any given quarter, a business is considered a small supplier if the value of worldwide taxable supplies it has declared over the course of the last four quarters does not exceed $30,000.
The amount of GST and QST, financial services and any capital asset sales are excluded from this calculation.
Exceptions: public service bodies
For organizations that are considered public service bodies, the limit for small supplier status is $50,000. Types of public service bodies include:
- Non-profit organizations
- Charities
- Municipalities
- School authorities
- Hospital authorities
- Public colleges
- Universities
- Etc.
The implications of small supplier status on GST/QST
If your business qualifies as a small supplier, you are not required to register for GST/QST. This also means that you don’t need to collect taxes from your customers or include them on your invoices.
What to do if taxable supplies exceed the $30,000 limit
Once a business exceeds the $30,000 limit, it is no longer considered a small supplier. This change in status occurs as soon as the limit is exceeded and can happen at any time during a quarter. The business must then register for GST/QST and start filing business tax returns for GST and QST like any other company.
Exceptions: small suppliers that are still required to register for GST/QST
Some businesses and self-employed individuals are required to register for GST and QST despite taxable supplies less than $30,000 in value. This rule applies to taxi drivers, businesses selling tobacco, fuel, alcohol and tires and companies that lease or sell vehicles.
Note that businesses that are considered small suppliers and are not required to register for GST/QST may still choose to do so. If you decide to register, you will need to collect taxes from your customers, but you will be able to benefit from a tax credit when purchasing new equipment for your business.
GST and QST registration
Whether you are legally obligated to register or are doing so voluntarily, you will need to go through the provincial government’s official website to begin the GST and QST registration process. Once you have your enterprise number, you will need the following:
- Registration date
- Fiscal year for GST and QST purposes
- Total annual income
- General information
GST and QST registration can be done online, by mail or by phone. Once your registration is complete, you will receive a GST/QST account number. Then, all you need to do is log in to your business account to track and manage your file online.
What to do after registering for GST and QST
Once you have registered for GST and QST, you’ll need to comply with the legal requirements involved. This consists of invoicing and collecting taxes from your customers, and then filing a quarterly return and paying those taxes to the government.
Note that you may be eligible for input tax credits (ITCs). ITCs apply to expenses related to your business activities, such as the supplies you consume and use in the course of your operations.
Learn more about corporate accounting and taxation with T2inc
Small supplier status exempts most small businesses in Quebec from having to collect and pay taxes, as long as their taxable supplies are under $30,000 in value. Before getting started, it’s important to carefully assess your needs and goals in order to determine what sort of business structure will be most advantageous for your company.
T2inc provides expert advice and support for Quebec SMEs. Regardless of the size and structure of your business, we can help you better understand how federal and provincial accounting and taxation work and what your obligations are.
To find out more about our tax services for businesses or discuss your concerns with financial experts, feel free to contact us. Our advisors will be happy to guide you through your great entrepreneurial adventure!
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
