The Goods 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 available. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales taxation’s. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses furthermore permitted to claim the taxes paid on expenses incurred that relate of their business activities. These are referred to as Input Tax Credit.
Does Your Business Need to Sign up for?
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 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 turn out to be less than $30,000. Revenue Canada views these businesses as small suppliers and they are therefore exempt.
The business activity is GST exempt. Exempt Goods and Services Tax Website and services includes residential land and property, child care services, most health and medical services etc.
Although a small supplier, i.e. organization with annual sales less than $30,000 is not had to have to file for GST, in some cases it is good do so. Since a business in a position to claim Input Tax credits (GST paid on expenses) if may possibly registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they are able to recover a significant involving taxes. This have to be balanced against the potential competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from having to file returns.