Entrepreneurship & Small Business

Ask me your GST/HST (and maybe PST and QST) questions!

  • Last Updated:
  • May 26th, 2017 9:50 am
Tags:
Newbie
Apr 18, 2003
29 posts
3 upvotes
Vaughan
Currently full time employed. I did a small job on the side for someone for a business. There was some gear to purchase. I wasn't intending on charging HST but they are paying with company cheque for their records. This is a one off not likely to occur again. How to deal with HST for this ?

TIA
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
krine wrote:
Mar 15th, 2014 10:28 am
Currently full time employed. I did a small job on the side for someone for a business. There was some gear to purchase. I wasn't intending on charging HST but they are paying with company cheque for their records. This is a one off not likely to occur again. How to deal with HST for this ?

TIA
Did you charge more than $30,000 for your services? I'm assuming you have not registered for GST/HST. If your revenue from the side job(s) did not exceed $30,000 over the last 12 months and you are not registered for GST/HST, do not charge GST/HST on your sales/revenues and you cannot claim an input tax credit to recover the GST/HST that you paid. The fact that your customer is paying with company cheque will not affect this.
Newbie
Apr 18, 2003
29 posts
3 upvotes
Vaughan
batman321123 wrote:
Mar 16th, 2014 1:37 am
Did you charge more than $30,000 for your services? I'm assuming you have not registered for GST/HST. If your revenue from the side job(s) did not exceed $30,000 over the last 12 months and you are not registered for GST/HST, do not charge GST/HST on your sales/revenues and you cannot claim an input tax credit to recover the GST/HST that you paid. The fact that your customer is paying with company cheque will not affect this.
Thanks for response - does it matter if I had a GST/HST number in 2012. I closed the account as of December 2012 in early 2013 after finding a full time job. Does that effectively reset the HST account ? If I started again would the 30,000 rule apply as I did bring in revenue greater than 30,000 when it was active (2011/2012). This job was under 5k - but if I wanted to do a few side jobs throughout the year would my old account have to be re-opened and therefore I would already be over the 30k marker. ?

Appreciate your knowledge on the little nuances of the HST tax. Thanks for sharing.
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
krine wrote:
Mar 16th, 2014 6:00 am
Thanks for response - does it matter if I had a GST/HST number in 2012. I closed the account as of December 2012 in early 2013 after finding a full time job. Does that effectively reset the HST account ? If I started again would the 30,000 rule apply as I did bring in revenue greater than 30,000 when it was active (2011/2012). This job was under 5k - but if I wanted to do a few side jobs throughout the year would my old account have to be re-opened and therefore I would already be over the 30k marker. ?

Appreciate your knowledge on the little nuances of the HST tax. Thanks for sharing.
Your taxable revenues need to be in excess of $30,000 during the last 12 months in order for you to be required to register for GST/HST. If the few side jobs you do are going to be less than $30k per year, I wouldn't register. However, if you have some big taxable expenses, you can register to recover the GST/HST you pay on expenses.
Member
Oct 5, 2008
212 posts
35 upvotes
batman321123 wrote:
Jan 4th, 2014 12:15 am
Generally, yes; you'll likely end up making money. However, in my experience, most IT contractors aren't really contractors. But that's a different topic for another day.
I'd love to hear more about it!
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
Ha, that's more of an income tax issue than sales tax.
Deal Addict
Feb 5, 2010
2765 posts
173 upvotes
Hi, if I pay for a conference today (currently in Q2, 2014) and the actual conference takes place in November (Q4, 2014):

1) Can include this on the Q2 filings for HST? or does it have to be in November/Q4?
2) Would I deduct this business expense for Q2? or in November/Q4?
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
Abel4Life wrote:
Apr 9th, 2014 2:47 pm
Hi, if I pay for a conference today (currently in Q2, 2014) and the actual conference takes place in November (Q4, 2014):

1) Can include this on the Q2 filings for HST? or does it have to be in November/Q4?
2) Would I deduct this business expense for Q2? or in November/Q4?
1) The ITCs can be claimed in Q2.
2) No idea, corporate tax isn't my area of expertise.
Sr. Member
User avatar
Jan 1, 2009
769 posts
123 upvotes
Vancouver
Abel4Life wrote:
Apr 9th, 2014 2:47 pm
Hi, if I pay for a conference today (currently in Q2, 2014) and the actual conference takes place in November (Q4, 2014):

1) Can include this on the Q2 filings for HST? or does it have to be in November/Q4?
2) Would I deduct this business expense for Q2? or in November/Q4?
1)Unless you were billed for the conference as a prepayment which includes GST/HST, and the GST/HST number of the supplier, then you can claim it:

152. (1) For the purposes of this Part, the consideration, or a part thereof, for a taxable supply shall be deemed to become due on the earliest of

(a) the earlier of the day the supplier first issues an invoice in respect of the supply for that consideration or part and the date of that invoice,

(b) the day the supplier would have, but for an undue delay, issued an invoice in respect of the supply for that consideration or part, and

(c) the day the recipient is required to pay that consideration or part to the supplier pursuant to an agreement in writing.


2) You account for the payment for supplies in your books when you receive the documentation that supports the amount recorded. If it is prepayment, it is not an expense, it is a current asset until you benefit from the conference in November and then, the expense recorded and the current asset reversed. For income tax purposes, you are allowed to deduct up to 2 conferences a year S. 20(10) of the ITA
Newbie
Apr 22, 2014
3 posts
Bedford, NS
Question Re: HST/GST Quick Method: Operate a sole proprietorship. Stupidly filed election last year to do Quick Method for HST return. Filed Annually. Didn't realize ITCs could not be used. Gross income approx. 170,000. HST received on sales = $21,915. ITCs ended up being $20,038. If regular method used would I would pay $1877 when HST return filed. With the Quick Method I will end up paying approx. $12,500 based on the 10% remittance rate for Nova Scotia, HST on capital expenditure of 3900 and 1% deduction on the first $300. This could "kill" me. Is there any way to get out of the Quick Method or am I - God forbid - stuck with it?
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
NaClH20Cowgirl wrote:
Apr 23rd, 2014 3:37 pm
Question Re: HST/GST Quick Method: Operate a sole proprietorship. Stupidly filed election last year to do Quick Method for HST return. Filed Annually. Didn't realize ITCs could not be used. Gross income approx. 170,000. HST received on sales = $21,915. ITCs ended up being $20,038. If regular method used would I would pay $1877 when HST return filed. With the Quick Method I will end up paying approx. $12,500 based on the 10% remittance rate for Nova Scotia, HST on capital expenditure of 3900 and 1% deduction on the first $300. This could "kill" me. Is there any way to get out of the Quick Method or am I - God forbid - stuck with it?
I'm not aware of any way out, as the CRA generally requires the election to be used for at least a year. However, I can't admit to being a Quick Method expert, so there may be an out that I'm not aware of.
Newbie
Apr 22, 2014
3 posts
Bedford, NS
batman321123 wrote:
Apr 23rd, 2014 11:05 pm
I'm not aware of any way out, as the CRA generally requires the election to be used for at least a year. However, I can't admit to being a Quick Method expert, so there may be an out that I'm not aware of.
Thanks for the prompt reply, batman. I was aware of the 1 yr. rule but just in case, I'll check with a tax lawyer for more direction. Better to spend $2,0000 than nearly $13,000. This business of no way out is certainly a little known, but huge tax grab. It appears that I'm not the only one who has fallen into this. While it's good to predict future "numbers" for your enterprise, it is sometimes not accurately forecast in this day and age, and CRA expects you to peer into the crystal ball very accurately with this rule. Thanks again. I'll let you know if I find out any different.
Newbie
Apr 22, 2014
3 posts
Bedford, NS
hello2adi wrote:
Feb 12th, 2014 11:54 am
I have some questions. I hope I can find some help here.
My business files returns annually.
For my tax year ending in 2013, I had sent the form GST74 to CRA in Aug. 2013 to elect for Quick method for GST.
However, a week later my accountant advised me to take it off and so I spoke with an Agent on CRA call center line. The Agent said, they have not yet received my request for Quick Method election. However, she said she will put a note on the business account and tell the agent to ignore any request for electing Quick Method on this account. This was back in Aug 2013.

Fast forward to Feb 2014, I have filed my GST and paid all the amount. And in these calculations we did not consider the Quick Method as we were under the impression that Quick Method was not elected for the business. However, today I logged in to CRA My Business Account online and saw that its says Quick Method was elected and effective for our business for the tax year ending in Dec 2013.

I spoke with CRA again and they say that they do see a note on the business account from the Agent back in August stating that Quick Method should not be elected for the customer. However, they say that they cannot do anything about it now and I will have to refile the GST/HST return for year 2013 again using Quick Method. Agent also said that I can send a letter to CRA explaining the situation and hope that they reverse the Quick Method Election for that year.
Refiling for me means, I will have to cough up additional $8000 dollars.

My questions;
1. I read the Quick Method Guide and understood that if a business is filing annual returns, then Quick Method election must be done by the first day of second quater of the fiscal year. For us, this was 1 April 2013. But we send the GST74 form for Quick election in Aug 2013. So, shouldn't they have invalidated the request completely?

2. If I send an mail to CRA explaining all the situation, what is the chance that they will reverse the Quick Method for the business for the year ending in 2013?

3. Also, is there any chance of getting an audit from CRA in this case? An audit would be something that I would like to avoid at all costs because I dont have all the receipts from past year.

Please let me know.
Good Morning, hello2adi, I am wondering if you found any resolve to this problem. I am in the same situation and will end up owing nearly $13,000 if I am forced to stay filing by the Quick Method. With the regular method, my ITCs would bring it down to approx. $1800. HUGE difference. One that is almost crippling. My explanation is a new post dated April 23 if you want to see it. If you have any other info. or have been successful, I'd be interested to know. I will likewise keep you informed.
Deal Addict
User avatar
Jul 22, 2004
1635 posts
19 upvotes
ETOBICOKE
Hello,

my company is registered for HST. It is a website owner, and maker of mobile apps that we gain revenue from. Essentially we make money on either app sales, or ad revenue within the apps, and website. We charge HST and remit for all Canadian sales (which make up only 5% or so of sales.) My question is, what type of good (exempt, zero rated, HST applicable) is the ad revenue which comes solely from US sources like google. As well, what about the US app sales i.e. on google play store/other stores?

Since only a small portion of HST is collected from the small number of CAD sales, we end up getting money back due to ITC. Can we get input tax credits on all our expenses to run the business even if only a small portion of income has HST charged to the customers?

I look forward to your response!

Thank you in advance,

Paul
signature removed for containing external link
[OP]
Deal Addict
User avatar
Dec 22, 2004
1973 posts
12 upvotes
NaClH20Cowgirl wrote:
Apr 24th, 2014 6:47 am
Thanks for the prompt reply, batman. I was aware of the 1 yr. rule but just in case, I'll check with a tax lawyer for more direction. Better to spend $2,0000 than nearly $13,000. This business of no way out is certainly a little known, but huge tax grab. It appears that I'm not the only one who has fallen into this. While it's good to predict future "numbers" for your enterprise, it is sometimes not accurately forecast in this day and age, and CRA expects you to peer into the crystal ball very accurately with this rule. Thanks again. I'll let you know if I find out any different.
With respect, I think the rule is fair. One cannot expect the law to effectively say "you may elect to use the quick method, but if you realize you're getting screwed, you can change your mind".

I just checked the legislation, and it looks like the 1 year rule is legislated, and not the CRA's administrative policy (paragraph 227(4.1)(a) of the Excise Tax Act).
× < >
Rotate image Save Cancel

Top