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 is available. Subject to certain exceptions, all companies 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 taxes and remitting them on a periodic basis. Businesses furthermore permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. The particular referred to as Input Tax Credit.

Does Your Business Need to File?

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

Estimated sales for the 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 services includes residential land and property, child care services, most health and medical services and many others.

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