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 positioned. 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 taxes and remitting them on a periodic basis. Businesses are also 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 Sign up for?

Prior to participating in any kind of business activity in Canada, all business owners need to determine how the GST Registration in India and relevant provincial taxes apply to both of them. Essentially, all businesses that sell goods and services in Canada, for profit, have to charge GST, except in the following circumstances:

Estimated sales for the business for 4 consecutive calendar quarters is expected to get 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 numerous others.

Although a small supplier, i.e. an individual 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 considerable 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 taxes. This is balanced against likely competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from having to file returns.