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 can be found at. Subject to certain exceptions, all companies are required to charge GST, currently at 5%, plus applicable provincial sales tax return. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. Tend to be some referred to as Input Tax Credits.

Does Your Business Need to File?

Prior to joining any kind of business activity in Canada, all business owners need to see how the GST and relevant provincial taxes apply to them. Essentially, all businesses that sell goods and services in Canada, for profit, have to 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 usually therefore exempt.

The business activity is GST Registration Portal Login 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 expected to file for GST, in some cases it is good do so. Since a business could only claim Input Breaks (GST paid on expenses) if considerable 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 is balanced against the potential competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from needing to file returns.

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