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 businesses 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 taxes and remitting them on a periodic basis. Businesses likewise 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 determine how the GST and relevant provincial taxes apply to that company. 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 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 Service Tax Application in India Online and services includes residential land and property, child care services, most health and medical services etc.

Although a small supplier, i.e. an individual 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 merely claim Input Breaks (GST paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant involving taxes. This has to be balanced against the potential competitive advantage achieved from not charging the GST, this substance additional administrative costs (hassle) from to be able to file returns.