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 positioned. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales 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 back to their business activities. These people are referred to as Input Tax Breaks.

Does Your Business Need to Ledger?

Prior to engaging in any kind of commercial 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 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 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 and a lot more.

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