GST Considerations For New Business Owners

The Goods and Services Tax Website 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 is situated. 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 will 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 Credit cards.

Does Your Business Need to Ledger?

Prior to engaging in any kind of business activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to the group. Essentially, all businesses that sell goods and services in Canada, for profit, should always charge GST, except in the following circumstances:

Estimated sales for the business for 4 consecutive calendar quarters is expected to get 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 a lot more.

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 good do so. Since a business can only claim Input Tax credits (GST paid on expenses) if tend to be registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they will be able to recover a significant involving taxes. This is balanced against likely competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from to be able to file returns.