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GST Considerations For New Business Owners

The Goods and Service Tax Application in India Online and Services Tax or GST is a consumption tax which isn't charged on most goods and services sold within Canada, regardless of where your business is available. Subject to certain exceptions, all businesses 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 are also permitted to claim the taxes paid on expenses incurred that relate to their business activities. Tend to be some referred to as Input Tax Credits.

Does Your Business Need to Register?

Prior to participating in any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to the group. Essentially, all businesses that sell goods and services in Canada, for profit, are required to charge GST, except in the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to be 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. an online-business 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 is able to claim Input Tax credits (GST paid on expenses) if considerable registered, many businesses, particularly in the start up phase where expenses exceed sales, may find oftentimes able to recover a significant amount of taxes. This have to be balanced against prospective competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from to be able to file returns.