GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax much more charged on most goods and services sold within Canada, regardless of where your business is situated. Subject to certain exceptions, all companies 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 taxes and remitting them on a periodic basis. Businesses additionally permitted to claim the taxes paid on expenses incurred that relate of their business activities. Tend to be some referred to as Input Tax Credit.

Does Your Business Need to Sign up for?

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 them. Essentially, all businesses that sell Goods and Services Tax Website and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for your 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 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 required to file for GST, in some cases it is good do so. Since a business can only 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 oftentimes able to recover a significant involving taxes. This really balanced against chance competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from having to file returns.