Items and Services Tax or GST can be a consumption tax that's charged on many goods and services sold within Canada, no matter where your small business is located. At the mercy of certain exceptions, all businesses must charge GST, currently at 5%, plus applicable provincial sales taxes. A business effectively works as a realtor for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Organizations are also permitted claim the taxes paid on expenses incurred that relate for their business activities. They are termed as Input Tax Credits.

Does Your Business Should Register? Ahead of engaging in any type of commercial activity in Canada, all business owners have to decide how the GST and relevant provincial taxes apply to them. Essentially, every business that sell products and services in Canada, to make money, have to charge GST, with the exception of the following circumstances:

Estimated sales for the business for 4 consecutive calendar quarters is predicted to be under $30,000. Revenue Canada views these businesses as small suppliers and they are therefore exempt.

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The business enterprise activity is GST exempt. Exempt products or services includes residential land and property, nursery services, most health and medical services etc.
Although a smaller supplier, i.e. a company with annual sales below $30,000 isn't required to submit GST, occasionally it's good to accomplish that. Since a small business could only claim Input Tax Credits (GST paid on expenses) when they are registered, many businesses, especially in the start up phase where expenses exceed sales, could find actually able to recover a significant amount of taxes. How's that for balanced from the potential competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from the need to file returns.

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