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 companies 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 required taxes and remitting them on a periodic basis. Businesses will also permitted to claim the taxes paid on expenses incurred that relate of their business activities. These are referred to as Input Tax Breaks.

Does Your Business Need to Sign up for?

Prior to going into any kind of economic activity in Canada, all business owners need to figure out how the GST Registration in India and relevant provincial taxes apply to them. Essentially, all businesses that sell goods and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for your business for 4 consecutive calendar quarters is expected to become 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 and a lot more.

Although a small supplier, i.e. a booming enterprise with annual sales less than $30,000 is not must file for GST, in some cases it is good do so. Since a business could only claim Input Breaks (GST paid on expenses) if they are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant quantity of taxes. This has to be balanced against chance competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from to be able to file returns.

This entry was posted in Uncategorized. Bookmark the permalink.