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 can be found at. Subject to certain exceptions, all businesses 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 furthermore permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. These people are referred to as Input Tax Snack bars.

Does Your Business Need to Register?

Prior to going into any kind of commercial 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, really should try to charge GST, except in the following circumstances:

Estimated sales for your business for 4 consecutive calendar quarters is expected to be able to 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 Tax Website 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 beneficial to do so. Since a business can only claim Input Breaks (GST paid on expenses) if these kinds of are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find oftentimes able to recover a significant amount of taxes. This really balanced against chance competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from in order to file returns.