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  #1  
Old 05-21-2019, 05:16 PM
defino defino is offline
 
Join Date: Dec 2012
Posts: 20
Default GST Question

I am looking to start a small excavation skid steer business based from our acreage and will be looking to buy some machinery, we are currently not registered for GST and wanted to ask if registration would be of benefit for tax reasons. Thanks for any advice
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  #2  
Old 05-21-2019, 05:40 PM
rubberboots rubberboots is offline
 
Join Date: Feb 2010
Location: Edmonton
Posts: 74
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You need one if you plan on making more than $30k/yr.
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  #3  
Old 05-21-2019, 06:33 PM
defino defino is offline
 
Join Date: Dec 2012
Posts: 20
Default Gst

Hopefully yes but also want if possible to register from the get go to claim GST back on machinery I will be buying initially
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  #4  
Old 05-21-2019, 07:17 PM
YAFORDDIESEL YAFORDDIESEL is offline
 
Join Date: Sep 2008
Location: stony plain
Posts: 243
Smile GST account

YES do it


before you make 30 K a year have a GST account.




two things CRA audit
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  #5  
Old 05-21-2019, 08:32 PM
JWCalgary JWCalgary is offline
 
Join Date: Jan 2013
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Quote:
Originally Posted by defino View Post
Hopefully yes but also want if possible to register from the get go to claim GST back on machinery I will be buying initially
Yes! Get the number and claim the ITC.

Sent from my SM-G530W using Tapatalk
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  #6  
Old 05-21-2019, 08:59 PM
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Moosetalker Moosetalker is offline
 
Join Date: Jul 2012
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Just a heads up you only have 5 years from purchase date to counter claim GST against GST collected Equipment purchases have different rules than CCA with Revenue Canada.

I made a big cash outlay to purchase landscaping equipment back when GST was 7%, Harper cut it back to 5% long story short with all the extra GST spent for fuel, oil, maintenance, repair etc it exceeded GST collected lost about 5k in GST That just ran out of reclaim time.
Wish I had been able to spread purchases out over a couple of years might have recouped a bit more.

System is geared to make you expand company, not Mom an Pop type business friendly.
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  #7  
Old 05-21-2019, 09:20 PM
defino defino is offline
 
Join Date: Dec 2012
Posts: 20
Default Gst

Thanks for all the info and replies itís appreciated, I will look into what I have to do for registration as I will my business number first then I am able to register for a GST number from what I understand. Just not sure if I should go sole trader route or incorporated having not done it before in Canada itís all new to me.
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  #8  
Old 05-22-2019, 06:27 AM
josey josey is offline
 
Join Date: Oct 2013
Location: Outside Airdrie
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Quote:
Originally Posted by defino View Post
Thanks for all the info and replies itís appreciated, I will look into what I have to do for registration as I will my business number first then I am able to register for a GST number from what I understand. Just not sure if I should go sole trader route or incorporated having not done it before in Canada itís all new to me.
I would stick with sole proprietor until you make serious money. Running (administration) a corp is a lot of work (=expensive).
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  #9  
Old 05-22-2019, 07:03 AM
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MoFugger21 MoFugger21 is offline
 
Join Date: Nov 2009
Location: Southern Alberta
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Quote:
Originally Posted by defino View Post
Thanks for all the info and replies itís appreciated, I will look into what I have to do for registration as I will my business number first then I am able to register for a GST number from what I understand. Just not sure if I should go sole trader route or incorporated having not done it before in Canada itís all new to me.
There a number of reasons to incorporate your business (multiple people/partners/shareholders, insurance or liability reasons) but if you will personally need/withdraw all the net profits out of business, there is no benefit for tax purposes. And generally, incorporation will cost you more year after year than being a sole proprietor (corporate financial statements, corporate and personal tax returns, corporate annual return and lawyers fees, etc).

The benefit of incorporation for tax purposes comes from the deferal of paying personal taxes to future years, but if you withdraw everything personally, there is no deferal available. The example I give people is if the business nets $30,000 profit and they need that $30,000 in their hands personally, it will make little difference in combined taxes whether they are incorporated and pay $30,000 salary/dividends, compared to netting $30,000 as a sole proprietor and already having the net cash in their hands. Now if you net $150,000 and only need $30,000 personally, that's where the benefit of incorporation comes from, because you can defer paying personal taxes on the remaining $120,000, whereas a sole proprietor pays tax on the full $150,000 in that year.

So generally, unless you have a liability or insurance reason to incorporate, or anticipate earning more profits than needed in any given year, operating as a sole proprietor is usually more cost effective.


As far as GST registration goes - once you reach $30,000 gross income you are required to register, so if you think you will get close to that figure, you might as well register before beginning operations.

In your situation, with the large cash outlay and large GST expense, you're correct in your thinking in recouping that cost, so you're better off registering before hand and claiming that cost back.
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  #10  
Old 05-22-2019, 10:16 AM
ssyd ssyd is offline
 
Join Date: Jun 2010
Location: Edmonton
Posts: 425
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Fun fact while Mo's talking about taxes. Even as a sole proprietor you have to submit tax installments quarterly. You don't have to file anything you can just pay it like a bill on your online banking.
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  #11  
Old 05-22-2019, 08:15 PM
defino defino is offline
 
Join Date: Dec 2012
Posts: 20
Default Gst

Spoke to the CRA today and received my business number / GST Number
I registered with CRA as a sole trader for now will see how this will progress and may incorporate in the future, CRA advised me if wish to add a business name to my account ( set up in my personal name at the moment ) that this was possible but advised I go to my local registry to check my choose business is not already being used.
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  #12  
Old 05-22-2019, 08:30 PM
ssyd ssyd is offline
 
Join Date: Jun 2010
Location: Edmonton
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Quote:
Originally Posted by defino View Post
Spoke to the CRA today and received my business number / GST Number
I registered with CRA as a sole trader for now will see how this will progress and may incorporate in the future, CRA advised me if wish to add a business name to my account ( set up in my personal name at the moment ) that this was possible but advised I go to my local registry to check my choose business is not already being used.
Sole proprietorships don't have to have unique names. Did you incorporate?
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  #13  
Old 05-22-2019, 08:58 PM
defino defino is offline
 
Join Date: Dec 2012
Posts: 20
Default Gst

No just obtained business / GST number from CRA and registered with them using my personal name/sole trader but the CRA agent told me I could call them back at a future date and add a Ďbusiness nameí to the account
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