The Goods and Services Tax or GST is a consumption tax that is 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 likewise permitted to claim the taxes paid on expenses incurred that relate thus to their business activities. Components referred to as Input Tax Credits.

Does Your Business Need to Register?

Prior to going into any kind of commercial activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to both of them. Essentially, all businesses that sell Goods and Services Tax Website 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 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 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 expected to file for GST, in some cases it is good do so. Since a business can only 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 oftentimes able to recover a significant amount of taxes. This ought to balanced against likely competitive advantage achieved from not charging the GST, this substance additional administrative costs (hassle) from needing to file returns.

GST Considerations For New Business Owners

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