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 located. 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 thus to their business activities. Tend to be some referred to as Input Tax Credit.

Does Your Business Need to Register?

Prior to going into any kind of commercial activity in Canada, all business owners need to see how the GST and relevant provincial taxes apply to that company. Essentially, all businesses that sell Goods and Services Tax Website and services in Canada, for profit, have to charge GST, except in the following circumstances:

Estimated sales for the business for 4 consecutive calendar quarters is expected turn out 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 numerous others.

Although a small supplier, i.e. organization with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business in a position to claim Input Breaks (GST paid on expenses) if considerable registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant quantity taxes. This have to be balanced against chance competitive advantage achieved from not charging the GST, this substance additional administrative costs (hassle) from having to file returns.