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 businesses are required to charge GST, currently at 5%, plus applicable provincial sales income taxes. A business effectively acts as an agent for Revenue Canada by collecting the required taxes and remitting them on a periodic basis. Businesses likewise permitted to claim the taxes paid on expenses incurred that relate back to their business activities. These are referred to as Input Tax Credit.
Does Your Business Need to Sign up for?
Prior to engaging in any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to them. 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 that 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 are also 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. organization with annual sales less than $30,000 is not expected to file for GST Registration Online in India, in some cases it is beneficial to do so. Since a business in a position to claim Input Breaks (GST paid on expenses) if tend to be registered, many businesses, particularly in start off up phase where expenses exceed sales, may find them to be able to recover a significant amount taxes. This is balanced against the opportunity competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from having to file returns.