GST Considerations For New Business Owners
The Goods 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 can be found at. 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 required taxes and remitting them on a periodic basis. Businesses will also permitted to claim the taxes paid on expenses incurred that relate of their business activities. Components referred to as Input Tax Credits.
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Prior to participating in any kind of business activity in Canada, all business owners need to see how the GST Registration in India and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, really should try to charge GST, except in the following circumstances:
Estimated sales for that business for 4 consecutive calendar quarters is expected to become 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 numerous others.
Although a small supplier, i.e. a booming enterprise 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 is able to claim Input Breaks (GST paid on expenses) if these kinds of are registered, many businesses, particularly in start off up phase where expenses exceed sales, may find oftentimes able to recover a significant amount taxes. This has to be balanced against prospective competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from needing to file returns.
