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 positioned. 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 taxes and remitting them on a periodic basis. Businesses furthermore permitted to claim the taxes paid on expenses incurred that relate of their business activities. Components referred to as Input Tax Snack bars.

Does Your Business Need to Register?

Prior to joining any kind of economic 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, really should try to charge GST, except in the following circumstances:

Estimated sales for your business for 4 consecutive calendar quarters is expected turn out to be less than $30,000. Revenue Canada views these businesses as small suppliers usually therefore exempt.

The business activity is GST exempt. Exempt Goods and Services Tax Website and services includes residential land and property, child care services, most health and medical services numerous 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 in a position to claim Input Tax credits (GST paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant amount of taxes. This have to be balanced against prospective competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from to be able to file returns.