Entrepreneurship & Small Business

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

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  • Jun 23rd, 2017 8:39 am
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[OP]
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Dec 22, 2004
1973 posts
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Blazin_Sunfire wrote:
Apr 24th, 2014 10:12 am
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
Hi Paul,

I'll answer your second question first.

You can get full ITCs, even to the extent the expenses that give rise to the ITCs relate to US sales, because you are not engaged in exempt activities.

The question of whether your app sales and ad revenues are subject to GST/HST (i.e., taxable), exempt, or zero-rated is a bit more tricky. Even without all the facts, it's relatively easy to rule out exempt because there likely is not a specific exemption that applies to these revenues. It therefore must be determined if your US revenues are taxable or zero-rated.

Section 7 of Part V of Schedule VI to the ETA zero-rates:
[INDENT]7. A supply of a service made to a non-resident person, but not including a supply of
[INDENT](a) a service made to an individual who is in Canada at any time when the individual has contact with the supplier in relation to the supply;
(a.1) a service that is rendered to an individual while that individual is in Canada;
(b) an advisory, consulting or professional service;
(c) a postal service;
(d) a service in respect of real property situated in Canada;
(e) a service in respect of tangible personal property that is situated in Canada at the time the service is performed;
(f) a service of acting as an agent of the non-resident person or of arranging for, procuring or soliciting orders for supplies by or to the person;
(g) a transportation service; or
(h) a telecommunication service.[/INDENT]
[/INDENT]

If your advertising service is supplied to a non-resident, it should be zero-rated under this provision, as long the service does not fall into paragraphs (a) to (h).

Section 10.1 of Part V of Schedule VI to the ETA zero-rates:
[INDENT]A supply of intangible personal property made to a non-resident person who is not registered under Subdivision d of Division V of Part IX of the Act at the time the supply is made, but not including
[INDENT](a) a supply made to an individual unless the individual is outside Canada at that time;
(b) a supply of intangible personal property that relates to
[INDENT](i) real property situated in Canada,
(ii) tangible personal property ordinarily situated in Canada, or
(iii) a service the supply of which is made in Canada and is not a zero-rated supply described by any section of this Part or Part VII or IX;[/INDENT]
(c) a supply that is the making available of a telecommunications facility that is intangible personal property for use in providing a service described in paragraph (a) of the definition “telecommunication service” in subsection 123(1) of the Act;
(d) a supply of intangible personal property that may only be used in Canada; or
(e) a prescribed supply.[/INDENT][/INDENT]


The apps sold to non-residents who are not registered for GST/HST should be zero-rated under this provision, unless they fall into paragraphs (a) to (e).
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Jul 22, 2004
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ETOBICOKE
Thank you so very much @batman321123 that was extremely helpful!
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Newbie
Mar 22, 2010
1 posts
I am HST registered but have been under $30,000 revenue for over a year and thought I could stop collecting HST on a specific date of my choice which I would then use as the "effective date" of closing the account on form RC145. But now I am worried that closing a BN account can never be back-dated but only for a future date? Meaning I'm liable for HST I wasn't collecting.... ouch....
[OP]
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Dec 22, 2004
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permute wrote:
May 2nd, 2014 12:45 am
I am HST registered but have been under $30,000 revenue for over a year and thought I could stop collecting HST on a specific date of my choice which I would then use as the "effective date" of closing the account on form RC145. But now I am worried that closing a BN account can never be back-dated but only for a future date? Meaning I'm liable for HST I wasn't collecting.... ouch....
As long as you've been registered for at least 12 months, you should be able to back-date the cancellation.
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Feb 5, 2010
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Hi, I am registered for HST and wanted clarification on Input Tax Credits. After reviewing the CRA guide it wasn't clear for purchases such as flights/hotel. Can we claim ITC for for HST on business-related flights/hotel purchases?

Thanks!
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Oct 16, 2007
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Hi there,

Do you answer questions for those federally incorporated?
[OP]
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Dec 22, 2004
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Abel4Life wrote:
May 20th, 2014 12:01 am
Hi, I am registered for HST and wanted clarification on Input Tax Credits. After reviewing the CRA guide it wasn't clear for purchases such as flights/hotel. Can we claim ITC for for HST on business-related flights/hotel purchases?

Thanks!
Yes. If the expenses are for business use and your activities are not exempt activities, you can claim ITCs. The type of expense generally doesn't matter with certain exceptions (meals, entertainment, golf club fees, etc.).
[OP]
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Dec 22, 2004
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mgronqui wrote:
May 20th, 2014 11:55 pm
Hi there,

Do you answer questions for those federally incorporated?
Yes... the method of incorporation shouldn't impact the GST/HST treatment.
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Oct 16, 2007
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batman321123 wrote:
May 21st, 2014 1:26 am
Yes... the method of incorporation shouldn't impact the GST/HST treatment.
Great, and thanks for the quick reply!

Here's my questions:

1) Can I claim health services like massage, osteopath, naturopath, accupuncture? Those are the 4 I need to see.
2) Can I claim gym memberships and clothing? I need a new pair of running shoes
3) I need a business phone and am looking to spoil myself with something rather pricey. Generally speaking, is it advantageous to do this or does it all work out in the same in the end? I understand I'll be paying out of my pocket right now, but next year when I file I get the write off the credits. Isn't it true that the more writeoffs the better for bumping you down to the next tax bracket?

TIA
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batman321123 wrote:
May 21st, 2014 1:25 am
Yes. If the expenses are for business use and your activities are not exempt activities, you can claim ITCs. The type of expense generally doesn't matter with certain exceptions (meals, entertainment, golf club fees, etc.).
Hmmm, meals and entertainment. Can you please elaborate more on this? My understanding is that for meals, it has to be a party and not you on your own. What entertainment qualifies?

Any other write off tips you can recommend that's not already known please share :)
[OP]
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Dec 22, 2004
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mgronqui wrote:
May 21st, 2014 1:48 am
Hmmm, meals and entertainment. Can you please elaborate more on this? My understanding is that for meals, it has to be a party and not you on your own. What entertainment qualifies?

Any other write off tips you can recommend that's not already known please share :)
mgronqui wrote:
May 21st, 2014 1:46 am
Great, and thanks for the quick reply!

Here's my questions:

1) Can I claim health services like massage, osteopath, naturopath, accupuncture? Those are the 4 I need to see.
2) Can I claim gym memberships and clothing? I need a new pair of running shoes
3) I need a business phone and am looking to spoil myself with something rather pricey. Generally speaking, is it advantageous to do this or does it all work out in the same in the end? I understand I'll be paying out of my pocket right now, but next year when I file I get the write off the credits. Isn't it true that the more writeoffs the better for bumping you down to the next tax bracket?

TIA
You can claim ITCs for GST/HST paid on expenses incurred in the course of your "commercial activities". You seem to be asking for ways to claim an ITC for GST/HST paid on personal expenses.
Newbie
Dec 11, 2011
33 posts
6 upvotes
MISSISSAUGA
My company is in Ontario. I have an American customer who will buy fabrics from my China factory and ship them to Honduras for garment manufacturing. Of course I will not charge my American customer HST. My question is about paying commission to my sales person. He is a Canadian and he will invoice me for the commission. Since the delivery address is in Honduras. Will the place of supply rules for supplies of services apply in this situation? If it requires HST, what should be the correct percentage?
PBC
[OP]
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pbcchan wrote:
May 27th, 2014 11:37 am
My company is in Ontario. I have an American customer who will buy fabrics from my China factory and ship them to Honduras for garment manufacturing. Of course I will not charge my American customer HST. My question is about paying commission to my sales person. He is a Canadian and he will invoice me for the commission. Since the delivery address is in Honduras. Will the place of supply rules for supplies of services apply in this situation? If it requires HST, what should be the correct percentage?
PBC
The general place of supply rule for services would generally apply to commission fees paid to a salesperson who sells tangible personal property. As such, the supplier should charge GST/HST based on the address of the purchaser. In your case, that would mean charging you Ontario HST at 13%.
Newbie
Mar 8, 2010
38 posts
4 upvotes
Is only the hst I can claim if I show I am leasing a commercial vehicle 100% of the time.
Newbie
May 10, 2008
1 posts
Toronto
Hello,

I have a part-time photography business that is registered for HST. I am in Ontario. If someone in Alberta orders a print and I mail it to them, should I charge them the Ontario HST (13%) or the Alberta rate (5% since they don't pay GST)?

Thanks!
Simon

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