Goods and Services Tax or GST can be a consumption tax that is certainly charged on many services and goods sold within Canada, wherever your enterprise is located. Susceptible to certain exceptions, all companies are needed to charge GST, currently at 5%, plus applicable provincial sales taxes. A company effectively works as a real estate agent for Revenue Canada by collecting the taxes and remitting them on the periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate for their business activities. These are known as Input Tax Credits.

Does Your small business Need to Register? Prior to doing just about any commercial activity in Canada, all business people have to figure out how the GST and relevant provincial taxes sign up for them. Essentially, all businesses that sell products and services in Canada, for profit, have to charge GST, with the exception of the following circumstances:

Estimated sales for that business for 4 consecutive calendar quarters is expected to get lower than $30,000. Revenue Canada views these businesses as small suppliers and they’re therefore exempt.

The company activity is GST exempt. Exempt goods and services includes residential land and property, child care services, most medical and health services etc.
Although a tiny supplier, i.e. a business with annual sales below $30,000 is not required to file for GST, occasionally it’s good for do so. Since an enterprise is only able to claim Input Tax Credits (GST paid on expenses) when they are registered, companies, particularly in the start up phase where expenses exceed sales, might find actually capable to recover lots of taxes. How’s that for balanced from the potential competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from being forced to file returns.

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