A small supplier is a Canada Revenue Agency designation for a business with taxable revenues under $30,000 for four consecutive quarters. The small supplier definition is important to Canadian small businesses because whether or not your business qualifies as a small supplier determines whether or not you have to register for, collect, and remit the Goods and Services Tax (GST)/Harmonized Sales Tax (HST).
Learn which businesses qualify as small suppliers and when a business needs to begin collecting GST/HST.
What Is a Small Supplier?
A small supplier has total taxable revenues (before expenses) from all businesses that are $30,000 or less in the last four consecutive calendar quarters and in any single calendar quarter.
To determine if you fit the small supplier definition, you must include worldwide revenues from your sales of goods and services that are subject to GST/HST, which also includes zero-rated sales and supplies. Zero-rated sales are those that are taxable at a rate of 0%.
You also must include revenues of any of your associates, but you may exclude financial services, goodwill, and sales of capital property.
How Does a Small Supplier Work?
For example, suppose Jean owns a flower shop. Jean's total revenue, shown in the table below, for the preceding four quarters does not exceed $30,000 despite the increase in revenue for the quarter ending March 31, so the small supplier definition applies (for at least the following quarter, plus one month).
|Quarter ending June 30||$8,000|
|Quart ending Sept. 30||$5,000|
|Quarter ending Dec. 31||$6,000|
|Quarter ending March 31||$10,000|
|Total for last four consecutive calendar quarters||$29,000|
However, if revenue for the next quarter (ending June 30) was also strong, pushing revenue for the preceding four quarters over the $30,000 limit, the small supplier designation would end as of June 30 plus one month.
In that case, Jean must apply to register for the GST/HST within 30 days of the first taxable sale. So in this case, small-supplier status ended on July 31, so if the next sale occurred on August 1, the business must apply to register for the GST/HST by the end of August.
|Quarter ending Sept. 30||$5,000|
|Quarter ending Dec. 31||$6,000|
|Quarter ending Mar. 31||$10,000|
|Quarter ending June 30||$10,000|
|Total for last four consecutive calendar quarters||$31,000|
The calculation for determining small-supplier status should be made at the end of every quarter.
Note that if on any day the business makes a sale that exceeds the $30,000 limit the small supplier exemption immediately ceases and:
- GST/HST must be collected on the sale
- GST/HST must be collected on subsequent sales
- The business must register for the GST/HST within 30 days
Charities and Public Institutions
The small-supplier threshold for charities and other public service bodies is different.
In Canada, a charity is an organization that is established to benefit the community and which uses its resources for charitable purposes.
To qualify as a small supplier as a public service body, there are two tests, one of which must be met to qualify for small supplier status.
Annual taxable supplies test: This test requires the charity or other public service body's revenues from worldwide taxable supplies (not including sales of capital property and financial services) to be equal to or less than $50,000 in the current calendar quarter and over the preceding four consecutive calendar quarters.
Gross revenue test: For the first fiscal year, registration for GST/HST is not required. For the second fiscal year, if the gross revenue from the first fiscal year is $250,000 or less, registration for GST/HST is not required. For subsequent fiscal years, if gross revenue from either of the previous two fiscal years is less than $250,000, registration for GST/HST is not required.
Even if you are a small supplier, you may still want to register for the GST voluntarily. Registration will allow you to claim Input Tax Credits (ITCs) for the GST/HST you paid on items and services purchased for your business, as well as, for example, GST/HST on hotels, meals, and other expenses incurred when traveling for business purposes.
- A small supplier is a business that is not required by the Canada Revenue Agency to collect and remit GST/HST.
- Small suppliers generally have taxable revenue under $30,000 for four consecutive quarters.
- The rules are slightly different for public service bodies or charities, which must pass either the gross revenue test or the annual taxable supplies test to be exempt from GST/HST.
- Voluntarily registering for GST allows you to claim ITCs for the GST/HST you paid on items for your business.