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 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 required taxes and remitting them on a periodic basis. Businesses additionally permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. The particular referred to as Input Tax Credits.

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Prior to going into 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 Tax Website and services in Canada, for profit, should 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 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 numerous others.

Although a small supplier, i.e. an online-business with annual sales less than $30,000 is not must 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 that they will be able to recover a significant quantity of taxes. This is balanced against chance competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from to be able to file returns.