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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 taxation's. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate back to their business activities. Components referred to as Input Tax Credits.

Does Your Business Need to Sign up for?

Prior to going into any kind of business activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to both of them. 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 to become 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 a lot more.

Although a small supplier, i.e. an individual 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 in a position to claim Input Breaks (GST Website India online paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that possibly they are able to recover a significant amount taxes. This is balanced against chance competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from to be able to file returns.