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 located. Subject to certain exceptions, all companies 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 will also permitted to claim the taxes paid on expenses incurred that relate of their business activities. Components referred to as Input Tax Breaks.
Does Your Business Need to Ledger?
Prior to engaging in 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, really should try 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 they are therefore exempt.
The business activity is GST exempt. Exempt Goods and service Tax Online Registration in India and services includes residential land and property, child care services, most health and medical services and many others.
Although a small supplier, i.e. organization with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business could only claim Input Breaks (GST paid on expenses) if considerable registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they are able to recover a significant quantity of taxes. This really balanced against likely competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from to be able to file returns.