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 positioned. Subject to certain exceptions, all companies are required to charge GST, currently at 5%, plus applicable provincial sales property taxes. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses additionally permitted to claim the taxes paid on expenses incurred that relate of their business activities. Components referred to as Input Tax Credit.
Does Your Business Need to Sign up for?
Prior to going into any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, have to charge GST, except in the following circumstances:
Estimated sales for the 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 etc.
Although a small supplier, i.e. an individual with annual sales less than $30,000 is not required to file for GST Registration Portal Login, in some cases it is good do so. Since a business can merely claim Input Tax credits (GST paid on expenses) if tend to be registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant amount of taxes. This is balanced against likely competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from in order to file returns.