GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax that is charged on most goods and services sold within Canada, regardless of where your business is available. 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 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. Tend to be some referred to as Input Tax Snack bars.

Does Your Business Need to File?

Prior to getting yourself into any kind of commercial activity in Canada, all business owners need to see how the GST and relevant provincial taxes apply to that company. Essentially, all businesses that sell Goods and Services Tax Website and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to be able to less than $30,000. Revenue Canada views these businesses as small suppliers usually 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 business with annual sales less than $30,000 is not had to have to file for GST, in some cases it is good do so. Since a business can merely claim Input Tax credits (GST paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant amount taxes. This really balanced against likely competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from in order to file returns.