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 can be found at. 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 required taxes and remitting them on a periodic basis. Businesses will also permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. These people are referred to as Input Tax Credit.

Does Your Business Need to Ledger?

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 both of them. Essentially, all businesses that sell goods and services in Canada, for profit, should always charge GST, except in the following circumstances:

Estimated sales for your 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 many others.

Although a small supplier, i.e. organization with annual sales less than $30,000 is not required to file for GST, in some cases it is good do so. Since a business can merely claim Input Breaks (GST Portal Login Online India paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they will be able to recover a significant amount taxes. This have to be balanced against chance competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from having to file returns.