The Value Added Tax, or VAT, is a tax on consumption & is collected on business transactions and imports. The basic principle is to charge VAT at each stage in the supply of goods and services (output tax).
VAT registered business must record, assess and report its VAT obligations to the tax authority in accordance with the applicable law
As a partially exempt business you’re required to review the VAT you’ve reclaimed over the previous twelve months and make an annual adjustment. What should you be looking out for to ensure you’ve maximized your claim?
Owning and operating a business in Canada means you have some legal responsibilities.
CRA requires regular reporting of Canadian sales tax, payroll taxes, and income taxes.
Each province and territory has their own tax related requirements as well.
In order to claim the input tax credit (ITC) the following conditions must be satisfied:
Recipient must be a taxable person and must be registered for VAT
VAT on the purchase must have been correctly charged by the supplier
Under the Capital Asset Scheme, the input tax initially recovered is adjusted based on the actual use of a capital asset during a specific period.