GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax that is charged on most goods and services sold within Canada, regardless of where your business is situated. Subject to certain exceptions, all companies are required to charge GST, currently at 5%, plus applicable provincial sales income taxes. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate to their business activities. Tend to be some 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 figure out how the GST and relevant provincial taxes apply to the group. Essentially, all businesses that sell goods and services in Canada, for profit, are required to charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to be able to less than $30,000. Revenue Canada views these businesses as small suppliers and are also 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 many others.

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