GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax much more charged on most goods and services sold within Canada, regardless of where your business is located. Subject to certain exceptions, all businesses 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 of their business activities. These people are referred to as Input Tax Breaks.

Does Your Business Need to Ledger?

Prior to joining any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to that company. Essentially, all businesses that sell Goods and Services Tax Registration in India Online and services in Canada, for profit, have to charge GST, except in the following circumstances:

Estimated sales for the business for 4 consecutive calendar quarters is expected to be less than $30,000. Revenue Canada views these businesses as small suppliers and consequently 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. an individual 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 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 amount of taxes. This have to be balanced against chance competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from needing to file returns.