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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Deal Fanatic
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Nov 19, 2004
7197 posts
982 upvotes
Cambridge, ON
AFG786 wrote:
May 10th, 2015 3:44 pm
I am going to assume the same follows for a sole proprietorship?

If I don't charge tax, can I still claim the tax paid on supplies? I am assuming I won't be able to claim other expenses like vehicle, events, gas, food, trips, etc.

Is there any additional requirements if you're importing from the United States (dropshipping) to Canada, and also selling to the United States (supplier is in the US)?

Thanks again.
If you are not registered, you can't charge GST or claim your ITCs on any taxes paid for supplies.

That said, you may not get the GST back but you can claim your expenses. Normally you would not claim the GST as an expense since you would file those in your GST return. However, since you are not doing that, you should be able to include the tax in your overall expenses.

As for what expenses you can claim, it has to be expenses that you incur to run your business only, and cannot include any personal use part. So if you drive to see a client, you can claim that portion of the vehicle expense, percent business use vs. percent personal use. The records need to be clear and things such as insurance better include business use. If your car insurance is a personal use policy only, then the CRA will look at that as not using your vehicle for business use. The rules help explain what you can claim and how much. Something like food, only 50% of the cost can be claimed and only if you are on a business trip for multiple days. You can't just claim your lunch for the day.

Selling in the US or Canada shouldn't make a difference until you register for a business number.

There is a lot of info on the CRA site. You should either take the time (and there is a lot to know) and read or talk to an accountant if you don't want to do the research yourself.
Sr. Member
Oct 6, 2014
929 posts
36 upvotes
Toronto, ON
How long do we have to file our T2? How come some corp requires to find 3 months after fiscal year, while others have 6 months? Thanks.
Deal Addict
Dec 21, 2012
1941 posts
295 upvotes
Toronto, ON
don242 wrote:
May 10th, 2015 4:33 pm
If you are not registered, you can't charge GST or claim your ITCs on any taxes paid for supplies.

That said, you may not get the GST back but you can claim your expenses. Normally you would not claim the GST as an expense since you would file those in your GST return. However, since you are not doing that, you should be able to include the tax in your overall expenses.

As for what expenses you can claim, it has to be expenses that you incur to run your business only, and cannot include any personal use part. So if you drive to see a client, you can claim that portion of the vehicle expense, percent business use vs. percent personal use. The records need to be clear and things such as insurance better include business use. If your car insurance is a personal use policy only, then the CRA will look at that as not using your vehicle for business use. The rules help explain what you can claim and how much. Something like food, only 50% of the cost can be claimed and only if you are on a business trip for multiple days. You can't just claim your lunch for the day.

Selling in the US or Canada shouldn't make a difference until you register for a business number.

There is a lot of info on the CRA site. You should either take the time (and there is a lot to know) and read or talk to an accountant if you don't want to do the research yourself.
Thanks a lot Don, much appreciated. I will consult a lawyer before launching the website. I will also be offering services alongside products so it will be best to get everything down accurately.
Deal Addict
Oct 4, 2006
1302 posts
248 upvotes
Toronto
Does one charge GST if my client is in the USA?
All of his business is in the States...I just provide consultation.
Thanks.
Deal Fanatic
User avatar
Nov 19, 2004
7197 posts
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Cambridge, ON
blindemboss wrote:
Oct 15th, 2015 5:25 pm
Does one charge GST if my client is in the USA?
All of his business is in the States...I just provide consultation.
Thanks.
Probably zero rated so, no.
Newbie
Jan 13, 2016
5 posts
Vancouver, BC
Hi there,
BC based business selling online. I know I have to charge tax to each province, but on what exactly? I had thought you charge GST and PST on the products but NOT on shipping. Now I'm not so sure.

1. In the cases of two taxes (a GST and PST) do you charge/collect/remit PST on products, and GST on Products + Shipping?
2. In the case of one harmonized tax, do you charge/collect/remit HST on Products + Shipping?
Member
May 2, 2010
241 posts
53 upvotes
Great thread. I am buying a 100% commercial property, with commercial tenants, in Toronto, with an incorporated company with an HST #. Do I have to pay HST on the purchase price? I believe not as I'll be paying (and collecting) thousands in HST once I assume the tenants' monthly leases. Please clarify how this works. Thanks.
Sr. Member
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Jan 1, 2009
798 posts
142 upvotes
Vancouver
BlueMorpho1 wrote:
Jan 14th, 2016 1:31 pm
Hi there,
BC based business selling online. I know I have to charge tax to each province, but on what exactly? I had thought you charge GST and PST on the products but NOT on shipping. Now I'm not so sure.

1. In the cases of two taxes (a GST and PST) do you charge/collect/remit PST on products, and GST on Products + Shipping?
2. In the case of one harmonized tax, do you charge/collect/remit HST on Products + Shipping?
You charge GST/HST on shipping. You are arranging for the shipping of the product to the customer, on their behalf, which is a taxable supply. Unless the product is exempt or zero-rated (i.e. shipping goods outside of Canada), you always charge GST/HST on shipping or freight. Always been that way. You do not charge PST on freight.
Sr. Member
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Jan 1, 2009
798 posts
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Vancouver
hotski7 wrote:
Jan 14th, 2016 8:40 pm
Great thread. I am buying a 100% commercial property, with commercial tenants, in Toronto, with an incorporated company with an HST #. Do I have to pay HST on the purchase price? I believe not as I'll be paying (and collecting) thousands in HST once I assume the tenants' monthly leases. Please clarify how this works. Thanks.
All commercial property is subject GST/HST. If you are GST/HST registrant, you have to self assess the HST on the acquisition of taxable real property on line 205 of your GST/HST return. But you can also claim and input tax credit (ITC) on the same return since you are using that property primarily in commercial activities. You also have to collect the GST/HST on the leases - as those are taxable supplies.

If you are not a GST/HST registrant, you still have to pay the GST/HST on the purchase price. The vendor will collect it from you. You may have to register for the GST/HST if your leases exceed over $30,000 in the last 4 calendar quarters or any calendar quarter.
Newbie
Jan 13, 2016
5 posts
Vancouver, BC
Thanks.

now in the case of having not charged it on shipping (my error, I thought you didn't need to), do I just self assess?
Member
Jun 6, 2008
297 posts
30 upvotes
Hi OP,
I have a question regarding leased car expense.

I am self employed and use my car for travelling to and from work. Car is 60% used for business and 40% for personal travel.
I am paying high lease rates 3% (around 570CAD/month). I wanted to know if there is really any real benefit in corporate or HST taxes in me keeping the car on lease with these high rates.

My account who I will be changing soon says that I should buyout my car because at the end I will save same amount with lease vs. owning a car when it comes to taxes.
He sets the max cap for car expenses (lease + insurance+gas+parking) to 4k per annum and actuals that I spend is much more than this.

Please advise.
Member
May 2, 2010
241 posts
53 upvotes
Cypherus21 wrote:
Jan 16th, 2016 2:29 pm
All commercial property is subject GST/HST. If you are GST/HST registrant, you have to self assess the HST on the acquisition of taxable real property on line 205 of your GST/HST return. But you can also claim and input tax credit (ITC) on the same return since you are using that property primarily in commercial activities. You also have to collect the GST/HST on the leases - as those are taxable supplies.

If you are not a GST/HST registrant, you still have to pay the GST/HST on the purchase price. The vendor will collect it from you. You may have to register for the GST/HST if your leases exceed over $30,000 in the last 4 calendar quarters or any calendar quarter.
Thanks. So since I can claim the ITC, will I actually have to fork out HST on the purchase price? If so, is it a full 13% of the price? Obviously the amount of HST I collect in leases will have to be paid but I am really hoping I don't get hit for the 13% now!!
Sr. Member
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Jan 1, 2009
798 posts
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Vancouver
hotski7 wrote:
Jan 17th, 2016 11:44 am
Thanks. So since I can claim the ITC, will I actually have to fork out HST on the purchase price? If so, is it a full 13% of the price? Obviously the amount of HST I collect in leases will have to be paid but I am really hoping I don't get hit for the 13% now!!
If you are a GST/HST registrant and are buying taxable real property, you don't pay any HST at 13% to the seller. It is your responsibility to calculate and remit the tax to the CRA on your GST/HST return.

When you file your GST/HST return, you report the HST at 13% (if the property is in Ontario) on line 205, but you can claim the same amount as an ITC to be included on line 108 of your return. The amounts will cancel out so you don't actually remit any tax to the CRA.

http://www.cra-arc.gc.ca/E/pub/gm/19-1/ ... P884_58868
Sr. Member
User avatar
Jan 1, 2009
798 posts
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Vancouver
hello2adi wrote:
Jan 17th, 2016 10:04 am
Hi OP,
I have a question regarding leased car expense.

I am self employed and use my car for travelling to and from work. Car is 60% used for business and 40% for personal travel.
I am paying high lease rates 3% (around 570CAD/month). I wanted to know if there is really any real benefit in corporate or HST taxes in me keeping the car on lease with these high rates.

My account who I will be changing soon says that I should buyout my car because at the end I will save same amount with lease vs. owning a car when it comes to taxes.
He sets the max cap for car expenses (lease + insurance+gas+parking) to 4k per annum and actuals that I spend is much more than this.

Please advise.
You can recover 60% of GST/HST paid or payable on lease payments as an ITC, and at the end of the lease term, claim an ITC on GST/HST you paid or became payable on the buyout of the lease. If you are a corporation, and a shareholder, any personal use of the vehicle by a shareholder is deemed to be used in commercial activities (i.e. 40% personal use is considered commercial), so you can claim 100% of the ITC on lease payments (restricted to the GTS/HST on $800 monthly lease payments). However, you may have to assess GST/HST on the taxable benefit based on calculating out the GST/HST on a standby charge and operating benefit (generally done by a professional accountant).

Alternatively, purchasing a vehicle has its benefits. You can claim 100% of the GST/HST paid on a vehicle used over 50% in commercial activities of a corporation, or 90% if you are individual. However, the ITC amount is restricted to the GST/HST on $30,000 if the vehicle is a passenger vehicle, regardless of percentage of use. For example, the CRA considers an extended cab pickup truck used between 50% and 90% in commercial activities to transport people or goods, to be a passenger vehicle (not a motor vehicle like a freight truck), so you would only be able to claim an ITC up to the $30,000 limit (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/ ... p-eng.html).

Those are the scenarios but you would have to do your own number crunching to see which is better.
Newbie
May 23, 2011
97 posts
1 upvote
BURNABY
Hello I'm a GST registrant in BC. Recently, I made expenses in Quebec and there was a QST paid.
Is there any way for me to claim it on GST return or any other way?

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