GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax much more charged on most goods and services sold within Canada, regardless of where your business is positioned. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales tax return. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses will also permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. Tend to be some referred to as Input Tax Credit cards.

Does Your Business Need to File?

Prior to joining any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected turn out to be less than $30,000. Revenue Canada views these businesses as small suppliers and they are therefore exempt.

The business activity is GST exempt. Exempt goods and services includes residential land and property, child care services, most health and medical services and a lot more.

Although a small supplier, i.e. a business with annual sales less than $30,000 is not had to have to file for GST, in some cases it is beneficial to do so. Since a business is able to claim Input Tax credits (GST Online Registration in India paid on expenses) if they are registered, many businesses, particularly in start off up phase where expenses exceed sales, may find them to be able to recover a significant involving taxes. This ought to balanced against the potential competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from having to file returns.