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 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 thus to their business activities. The particular referred to as Input Tax Credit cards.
Does Your Business Need to Ledger?
Prior to going into any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to that company. 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 be able to 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 and many others.
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 can merely claim Input Breaks (GST Registration Online in India paid on expenses) if may possibly registered, many businesses, particularly in the start up phase where expenses exceed sales, may find them to be able to recover a significant quantity taxes. This is balanced against the potential competitive advantage achieved from not charging the GST, provided additional administrative costs (hassle) from in order to file returns.