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 situated. 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 will 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 Snack bars.

Does Your Business Need to Sign up for?

Prior to getting yourself into any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, really should try to charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to become less than $30,000. Revenue Canada views these businesses as small suppliers and consequently 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. an individual 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 is able to claim Input Tax credits (GST Registration in India paid on expenses) if considerable registered, many businesses, particularly in the start up phase where expenses exceed sales, may find oftentimes able to recover a significant quantity of taxes. This ought to balanced against the potential competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from having to file returns.

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