GST Considerations For New Business Owners

The Goods and Services Tax or GST Online Registration in India 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 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 furthermore permitted to claim the taxes paid on expenses incurred that relate back to their business activities. Tend to be some 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 determine how the GST and relevant provincial taxes apply to the group. Essentially, all businesses that sell goods and services in Canada, for profit, are required to charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to get 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. organization with annual sales less than $30,000 is not expected 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 tend to be registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant quantity of taxes. This is balanced against likely competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from having to file returns.