GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax which charged on most Goods and service Tax Online Registration in India and services sold within Canada, regardless of where your business is located. 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 required taxes and remitting them on a periodic basis. Businesses will also permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. These people are referred to as Input Tax Credit.

Does Your Business Need to Register?

Prior to getting yourself into any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to them. 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 become 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 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 good do so. Since a business can merely claim Input Tax credits (GST paid on expenses) if they are registered, many businesses, particularly in start off up phase where expenses exceed sales, may find them to be able to recover a significant amount of taxes. This really balanced against chance competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from to be able to file returns.