GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax that is charged on most goods and services sold within Canada, regardless of where your business is available. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales property taxes. 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 to their business activities. Components referred to as Input Tax Credits.

Does Your Business Need to Register?

Prior to getting yourself into any kind of business 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 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 turn out to be less than $30,000. Revenue Canada views these businesses as small suppliers and perhaps 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 numerous others.

Although a small supplier, i.e. a business with annual sales less than $30,000 is not had to have to file for GST, in some cases it is good do so. Since a business can merely claim Input Tax credits (GST Registration Online in India paid on expenses) if tend to be registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant quantity of taxes. This has to be balanced against the opportunity competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from needing to file returns.