GST Considerations For New Business Owners
The Goods and Services Tax or GST is a consumption tax which isn’t 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 tax return. 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 of their business activities. These people are referred to as Input Tax Credits.
Does Your Business Need to Register?
Prior to engaging in any kind of economic activity in Canada, all business owners need to figure out 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 the business for 4 consecutive calendar quarters is expected to be able to less than $30,000. Revenue Canada views these businesses as small suppliers usually therefore exempt.
The business activity is GST Registration in India exempt. Exempt goods and services includes residential land and property, child care services, most health and medical services and 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 could only claim Input Tax credits (GST paid on expenses) if tend to be registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they will be able to recover a significant quantity taxes. This is balanced against the opportunity competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from needing to file returns.
