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 situated. Subject to certain exceptions, all companies 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 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 Breaks.

Does Your Business Need to File?

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 the group. Essentially, all businesses that sell goods and services in Canada, for profit, should always 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 are also 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 merely claim Input Tax credits (GST Registration Online in India paid on expenses) if considerable registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant amount taxes. This really balanced against chance 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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