GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax which 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 taxes. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses furthermore permitted to claim the taxes paid on expenses incurred that relate inside their business activities. These are referred to as Input Tax Breaks.

Does Your Business Need to File?

Prior to participating in any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, should charge GST Website India online, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to become less than $30,000. Revenue Canada views these businesses as small suppliers and perhaps they 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 many others.

Although a small supplier, i.e. organization with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business is able to claim Input Tax credits (GST paid on expenses) if tend to be registered, many businesses, particularly in start off up phase where expenses exceed sales, may find oftentimes able to recover a significant amount of taxes. This ought to balanced against the potential competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from having to file returns.

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