GST Considerations For New Business Owners

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

Does Your Business Need to Ledger?

Prior to engaging in 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, have to charge GST, except in the following circumstances:

Estimated sales for your 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 Registration Online in India 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. a business with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business in a position to claim Input Tax credits (GST paid on expenses) if they are registered, many businesses, particularly in start off up phase where expenses exceed sales, may find oftentimes able to recover a significant involving taxes. This is balanced against the potential competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from having to file returns.