The Goods and Service Tax Application in India Online and Services Tax or GST is a consumption tax with this increasing 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 taxes. 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 thus to their business activities. These people are referred to as Input Tax Credit cards.
Does Your Business Need to Subscribe?
Prior to getting yourself into any kind of business activity in Canada, all business owners need to see how the GST and relevant provincial taxes apply to them. Essentially, all businesses that sell goods and services in Canada, for profit, have to charge GST, except in the following circumstances:
Estimated sales for your business for 4 consecutive calendar quarters is expected to get less than $30,000. Revenue Canada views these businesses as small suppliers and perhaps 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. a business with annual sales less than $30,000 is not required to file for GST, in some cases it is good do so. Since a business in a position to claim Input Tax credits (GST paid on expenses) if they are registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they are able to recover a significant amount of taxes. This really balanced against prospective competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from in order to file returns.