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Running a forest school in Canada can be a rewarding venture that allows you to connect children with nature and provide valuable educational experiences. However, like any business, you need to navigate the world of taxes, and one of the key aspects you may encounter is the Goods and Services Tax (GST/HST). The GST/HST is a value-added tax that, if applicable, your entity must collect and remit to the government. It took me a lot of reading and talking to people to understand how to handle the GST/HST when I first started on my venture, and I am sharing what I've learnt to hopefully make your entrepreneurial path a little less frustrating. This article will break down GST/HST for forest school operators, explaining how to determine if you need to charge GST/HST, what the $30,000 small supplier threshold is, and what you need to do once you've reached that point.
The Basics of GST/HST in Canada
Before delving into the specifics for forest school operators, it's important to understand the basics of GST/HST in Canada. GST/HST is a federal tax that is levied on the supply of most goods and services in Canada. As a business owner, you are responsible for collecting and remitting GST/HST to the Canada Revenue Agency (CRA) if your service(s) are deemed Non-exemptible. Generally speaking, forest school programs for children 14 years of age or younger are considered child care services according to the CRA, and are thus exempt from GST/HST. However, whether the services your forest school provides are considered tax-exempt depends on the nature of the service.
For more information on how to determine whether your forest school is exempted from GST/HST, refer to this article:
List of examples that would not be GST/HST exempt:
If you run a 2-hour program teaching survival skills to children 9-12 years old. Even though you provide some degree of care and supervision during the two hours, the skills training is the main purpose of the program.
If you run a forest school for children 15 years and older, then your services would not be considered child care.
If your run an over-night forest school program where children spend 24 hours a day at the school. Since the program duration exceeds 24 hours, it is not considered child care to the CRA.
If you sell products to your clients at the forest school, the sales of the products are considered as a separate service from the child care service, and is thus not tax-exempt.
Consider how your program is structured to evaluate whether it is mainly focused on childcare or not. While trying to provide an amazing forest school program, the lines between childcare and non-childcare services can accidentally get blurred. For the services and products that are not tax-exempt, you may need to charge GST/HST. Continue reading to understand when to start collecting GST/HST.
The $30,000 Small Supplier Threshold
If parts of the services and sales from your organization are considered taxable for GST/HST, usually due to sales and services that are outside of regular "childcare" services (i.e selling products, certain training services, etc), you'll be expected to charge and remit GST/HST to the Canadian Government.
One of the most critical aspects of GST/HST for forest school operators is the $30,000 threshold. This threshold determines when you are required to start charging and remitting GST/HST. Before you reach this threshold, you are considered a small supplier, and your sales are GST/HST exempt. The threshold is based on your total revenue from taxable supplies and services over consecutive calendar quarters.
Imagine you are running a forest school and offering various programs throughout the year. Let's say you started your forest school in January, and by December, your total revenue from taxable services (merchandise sales, tuition for programs that are mainly intended for skills development e.g. survival skills, consultation, etc.) amounted to $25,000. At this point, you are not required to charge GST/HST because you haven't exceeded the $30,000 threshold and still considered to be a small supplier.
Exceeding the Threshold within Four Calendar Quarters
Now, let's explore what happens if you exceed the $30,000 threshold within a 12-month period but not within a single calendar quarter. This is where the concept of calendar quarters comes into play. A calendar quarter refers to a three-month period within a year, divided into four quarters: Q1 (January-March), Q2 (April-June), Q3 (July-September), and Q4 (October-December).
Suppose your forest school continues to grow, and by the end of Q1 in the following year, your total revenue from taxable supplies reaches $35,000 over the last four quarters (year 1 Q2, year 1 Q3, year 1 Q4, and year 2 Q1). While you haven't exceeded the threshold in a single quarter, you have exceeded it within four consecutive calendar quarters. In this case, you will need to start charging GST/HST, but not immediately. You'll begin collecting GST/HST a month after the end of the quarter in which you exceeded the threshold. In this example, you would start charging GST/HST on May 1st, which is a month after the end of Q1.
Exceeding $30,000 in One Calendar Quarter
Now, let's consider a scenario where your forest school experiences a significant surge in enrolment or sales, causing you to exceed the $30,000 threshold in a single calendar quarter. This situation triggers a different rule regarding when you need to start charging GST/HST.
Imagine your forest school, primarily due to a successful summer camp program, generates $35,000 in revenue during the months of July to September (Q3). Since you've surpassed the $30,000 threshold within one quarter, you are required to start charging GST/HST immediately, starting with the sale that pushed you over the threshold.
In this example, you would begin charging GST/HST on the very first sale that brought your Q3 revenue above $30,000, and you must continue collecting GST/HST on all subsequent sales.
Registering for an GST/HST Account
Regardless of which scenario applies to your forest school, once you're required to charge GST/HST, you need to register for an GST/HST account with the CRA. Registering for a GST/HST account is a “straightforward” process that can typically be done online through the CRA's website.
Once registered, you'll receive a GST/HST number that you should prominently display on your invoices and receipts. This number identifies you as a registered GST/HST collector and allows you to collect and remit GST/HST as required by law.
Conclusion
Understanding the intricacies of GST/HST in Canada is essential for forest school operators to ensure compliance with tax regulations. The $30,000 threshold, calendar quarters, and the timing of when to start charging GST/HST are key elements to grasp. Whether you exceed the threshold within four calendar quarters or within one quarter, it's crucial to keep track of your revenue and follow the appropriate guidelines for GST/HST collection. By staying informed and compliant, you can continue to offer enriching experiences in your forest school while fulfilling your tax obligations as a responsible business owner.
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