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 is situated. 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 are also permitted to claim the taxes paid on expenses incurred that relate inside their business activities. Components referred to as Input Tax Breaks.
Does Your Business Need to Register?
Prior to engaging in any kind of business 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 get less than $30,000. Revenue Canada views these businesses as small suppliers and are also 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 etc.
Although a small supplier, i.e. an online-business 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 Website India online paid on expenses) if they are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find oftentimes able to recover a significant involving taxes. This really balanced against the opportunity competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from in order to file returns.