The Goods and Services Tax or GST is a consumption tax that is certainly charged of all products or services sold within Canada, where ever your enterprise is located. Subject to certain exceptions, all businesses are needed to charge GST, currently at 5%, plus applicable provincial sales taxes. A small business effectively serves as a representative for Revenue Canada by collecting the required taxes and remitting them with a periodic basis. Organizations are also allowed to claim the required taxes paid on expenses incurred that relate to their business activities. These are called Input Tax Credits.

Does Your organization Must Register? Prior to doing just about any commercial activity in Canada, all business owners should decide how the GST and relevant provincial taxes sign up for them. Essentially, all companies that sell products or services in Canada, to make money, are required to charge GST, except in the following circumstances:

Estimated sales to the business for 4 consecutive calendar quarters is predicted being below $30,000. Revenue Canada views these firms as small suppliers and they’re therefore exempt.



The business activity is GST exempt. Exempt products and services includes residential land and property, child care services, most health and medical services etc.
Although a tiny supplier, i.e. a small business with annual sales lower than $30,000 isn’t needed to submit GST, in some cases it can be good for do this. Since a small business is only able to claim Input Tax Credits (GST paid on expenses) when they are registered, many organisations, mainly in the start-up phase where expenses exceed sales, may find that they’re capable to recover a great deal of taxes. How’s that for balanced contrary to the potential competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from having to file returns.

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