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 can be found at. Subject to certain exceptions, all companies 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 taxes and remitting them on a periodic basis. Businesses likewise permitted to claim the taxes paid on expenses incurred that relate back to their business activities. These are referred to as Input Tax Credit.

Does Your Business Need to File?

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 these guys. Essentially, all businesses that sell goods and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to be 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 many others.

Although a small supplier, i.e. organization with annual sales less than $30,000 is not expected to file for GST, in some cases it is good do so. Since a business can only claim Input Breaks (GST paid on expenses) if these kinds of are registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that possibly they are able to recover a significant quantity of taxes. This has to be balanced against chance competitive advantage achieved from not charging the GST Online Registration in India, provided additional administrative costs (hassle) from in order to file returns.