GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax with this increasing 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 taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate inside their business activities. These are referred to as Input Tax Credit.

Does Your Business Need to File?

Prior to getting yourself into any kind of business 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 Service Tax Application in India Online 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 be 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 many others.

Although a small supplier, i.e. an individual with annual sales less than $30,000 is not expected to file for GST, in some cases it is good do so. Since a business can only claim Input Tax credits (GST paid on expenses) if they are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant involving taxes. This have to be balanced against the potential competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from needing to file returns.