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 Tax Website and services sold within Canada, regardless of where your business can be found at. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales taxes. A business effectively acts as an agent for Revenue Canada by collecting the 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. These people are referred to as Input Tax Breaks.

Does Your Business Need to Sign up for?

Prior to joining any kind of business activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to both of them. Essentially, all businesses that sell goods 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 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 a lot more.

Although a small supplier, i.e. an individual 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 in a position to 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 possibly they are able to recover a significant involving taxes. This ought to balanced against chance competitive advantage achieved from not charging the GST, this substance additional administrative costs (hassle) from having to file returns.