GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax which isn’t charged on most goods and services sold within Canada, regardless of where your business can be found at. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales taxes. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses additionally permitted to claim the taxes paid on expenses incurred that relate of their business activities. The particular referred to as Input Tax Credit.

Does Your Business Need to Sign up for?

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

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

The business activity is GST exempt. Exempt Goods and Service Tax Application in India Online and services includes residential land and property, child care services, most health and medical services many others.

Although a small supplier, i.e. a booming enterprise with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business is able to claim Input Breaks (GST paid on expenses) if considerable registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they are able to recover a significant involving taxes. This is balanced against chance competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from in order to file returns.