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The Goods and Services Tax or GST can be a consumption tax that is charged on many services and goods sold within Canada, wherever your small business is located. Susceptible to certain exceptions, every business are required to charge GST, currently at 5%, plus applicable provincial sales taxes. A business effectively serves as a realtor for Revenue Canada by collecting the required taxes and remitting them over a periodic basis. Businesses are also permitted to claim the required taxes paid on expenses incurred that relate on their business activities. They’re called Input Tax Credits.

Does Your organization Should Register? Before doing just about any commercial activity in Canada, all companies need to determine how the GST and relevant provincial taxes sign up for them. Essentially, all businesses that sell products and services in Canada, to make money, are required to charge GST, except in these circumstances:

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



The organization activity is GST exempt. Exempt products or services includes residential land and property, child care services, most health and medical services etc.
Although a small supplier, i.e. a company with annual sales below $30,000 is not required to launch GST, sometimes it really is good for accomplish that. Since a small business could only claim Input Tax Credits (GST paid on expenses) should they be registered, companies, especially in the set up phase where expenses exceed sales, could find they are capable to recover a significant amount of taxes. This has to be balanced up against the potential competitive advantage achieved from not charging the GST, plus the additional administrative costs (hassle) from being forced to file returns.

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