ask this question when starting a new venture.
While you are not required to register
for GST until your annual gross revenues exceed a minimum threshold (currently $30,000) we
generally recommend that any business register as soon as possible. Three good reasons
- Unless you are
a GST registrant you can't claim GST input tax credits (GST paid on business
expenditures). If, as a GST registrant, your input tax credits exceed GST collected on
sales you may claim a refund of the excess from Canada Customs and Revenue Agency. If
you're not a registrant the GST paid on expenses is included as part of the expense when
computing net income - your tax liability is reduced by your marginal tax rate.
advertising the fact that you're a small venture. If your customers are other businesses
the GST that you charge on sales does not represent a direct expense for them (see above)
it becomes a flow-through and most businesses expect to pay GST.
- Companies that
are required to register for GST must remit it to Canada Customs and Revenue Agency - even
if it hasn't been collected from the customer. By registering for GST upon starting your
business you can't inadvertently surpass the $30,000 threshold and find yourself being
registered retroactively and having to pay GST not billed to clients.
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