The Goods and Services Tax or GST is a consumption tax which isn’t 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 taxation’s. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses likewise permitted to claim the taxes paid on expenses incurred that relate inside their business activities. These are referred to as Input Tax Credit.

Does Your Business Need to Register?

Prior to going into any kind of economic activity in Canada, all business owners need to determine how the GST and relevant provincial taxes apply to them. Essentially, all businesses that sell goods and services in Canada, for profit, should always charge GST, except in the following circumstances:

Estimated sales for the 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 perhaps they are 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 many others.

Although a small supplier, i.e. an online-business with annual sales less than $30,000 is not required to file for GST, in some cases it is beneficial to do so. Since a business can only claim Input Tax credits (GST Registration Portal Login paid on expenses) if considerable registered, many businesses, particularly in the start up phase where expenses exceed sales, may find that they will be able to recover a significant amount taxes. This has to be balanced against chance competitive advantage achieved from not charging the GST, and the additional administrative costs (hassle) from in order to file returns.