The Goods and Services Tax or GST is a consumption tax which 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 furthermore permitted to claim the taxes paid on expenses incurred that relate of their business activities. These are referred to as Input Tax Credits.
Does Your Business Need to Register?
Prior to joining any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to these guys. Essentially, all businesses that sell goods and services in Canada, for profit, are required 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 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 many others.
Although a small supplier, i.e. organization with annual sales less than $30,000 is not must file for GST Online Registration in India, in some cases it is beneficial to do so. Since a business could only claim Input Tax credits (GST paid on expenses) if these kinds of are 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 has to be balanced against prospective competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from in order to file returns.