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

Does Your Business Need to File?

Prior to joining any kind of economic activity in Canada, all business owners need to see how the GST and relevant provincial taxes apply to the group. 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 become less than $30,000. Revenue Canada views these businesses as small suppliers and are also therefore exempt.

The business activity is GST Registration in India 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 business with annual sales less than $30,000 is not must file for GST, in some cases it is beneficial to do so. Since a business can only claim Input Tax credits (GST paid on expenses) if considerable registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they will be able to recover a significant quantity of taxes. This ought to balanced against the potential competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from having to file returns.