GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax which 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 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 are also 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 cards.

Does Your Business Need to Ledger?

Prior to getting yourself into any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to them. Essentially, all businesses that sell Goods and service Tax Online Registration in India and services in Canada, for profit, should always 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 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. a booming enterprise with annual sales less than $30,000 is not expected to file for GST, in some cases it is beneficial to do so. Since a business can only claim Input Breaks (GST paid on expenses) if these kinds of are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they will be able to recover a significant amount of taxes. This is balanced against prospective competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from needing to file returns.