Goods and Services Tax or GST is really a consumption tax that’s charged of all goods and services sold within Canada, regardless of where your company is located. Subject to certain exceptions, all companies have to charge GST, currently at 5%, plus applicable provincial sales taxes. An enterprise effectively represents a real estate agent for Revenue Canada by collecting the required taxes and remitting them with a periodic basis. Corporations are also permitted to claim the taxes paid on expenses incurred that report on their business activities. These are known as Input Tax Credits.
Does Your small business Have to Register? Before participating in just about any commercial activity in Canada, all companies have to determine how the GST and relevant provincial taxes affect them. Essentially, all businesses that sell goods and services in Canada, for profit, have to charge GST, with the exception of the subsequent circumstances:
Estimated sales for your business for 4 consecutive calendar quarters is anticipated to become lower than $30,000. Revenue Canada views these businesses as small suppliers and they’re therefore exempt.
The company activity is GST exempt. Exempt products and services includes residential land and property, nursery services, most medical and health services etc.
Although a small supplier, i.e. an enterprise with annual sales lower than $30,000 isn’t required to file for GST, sometimes it can be best for do this. Since a small business can only claim Input Tax Credits (GST paid on expenses) if they are registered, many companies, particularly in the launch phase where expenses exceed sales, may find that they’re capable to recover a significant amount of taxes. How’s that for balanced against the potential competitive advantage achieved from not charging the GST, and also the additional administrative costs (hassle) from being forced to file returns.
For more information about Gst Registration explore our web page.