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 located. Subject to certain exceptions, all companies are required to charge GST, currently at 5%, plus applicable provincial sales tax return. 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 back to their business activities. Tend to be some referred to as Input Tax Credits.

Does Your Business Need to Register?

Prior to joining any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to that company. 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 get 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. organization with annual sales less than $30,000 is not must file for GST, in some cases it is good do so. Since a business is able to claim Input Tax credits (GST 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 of taxes. This is balanced against likely competitive advantage achieved from not charging the GST Registration Online in India, and the additional administrative costs (hassle) from having to file returns.