Tax Tips - Business Tips: Goods & Services Tax
Goods and Services Tax is chargeable at 5% (6% prior to Jan 1, 2008) of the selling price on all sales made by registrants. Only firms with sales over $30,000 are required to be registered. Once registered, you must formally deregister in order to avoid collecting and remitting the tax. There is an input tax credit allowed of 5% (6% prior to Jan 1, 2008) of all qualifying purchases as a deduction from Goods and Services Tax.
INPUT TAX CREDITS
Purchases excluded from the right to collect Goods and Services Input Tax Credits include; insurance, wages and benefits, provincial taxes, bank charges and interest.
Certain suppliers for GST are defined as exempt (residential rents, provincial governments, insurance agencies, educational institutions). These organisations do not charge GST on their sales, but also cannot deduct GST for Input Tax Credits.
ZERO RATED SUPPLIERS
Certain firms are defined as zero rated for their sales (farmers, fisherman, doctors, dentists and medical suppliers). These firms do not charge GST on their sales, but are allowed to deduct Input Tax Credits on their purchases.
GST REGISTRATION REQUIREMENTS
Firms with sales over $30,000 must register. Firms can register as annual filers, quarterly filers, or monthly filers. Firms that sell over $1,000,000 must register as monthly filers. Firms with sales over $250,000 must register as quarterly filers. All other firms can register as annual filers, however, they must pay monthly installments if sales were over $6,000 per month