GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax with this increasing 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 income taxes. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses likewise permitted to claim the taxes paid on expenses incurred that relate back to their business activities. Tend to be some referred to as Input Tax Breaks.

Does Your Business Need to Register?

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 them. 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 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 many others.

Although a small supplier, i.e. an individual with annual sales less than $30,000 is not expected to file for GST Registration in India, in some cases it is beneficial to do so. Since a business in a position to claim Input Tax credits (GST paid on expenses) if tend to be registered, many businesses, particularly in start off up phase where expenses exceed sales, may find them to be able to recover a significant amount taxes. This has to be balanced against the opportunity competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from to be able to file returns.