Entrepreneurship & Small Business

Odd client request regarding HST

  • Last Updated:
  • Sep 27th, 2014 11:41 pm
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Newbie
Jul 14, 2014
82 posts
New Westminster, BC

Odd client request regarding HST

A client who has been with me for several years is all of a sudden asking me stop charging HST on a portion of the invoice. He pays me a fixed amount based on my hours and a variable amount. The variable amount is a percentage of profit that I generate for him that month and that is what he doesn't want to pay HST on anymore.

I responded simply by stating that I couldn't do that and that I needed to collect it for the government.

Is there any validity to his request? I.e. could this "profit sharing amount" somehow be HST exempt? (I don't think so, but just want to double check)...
5 replies
Deal Fanatic
Jun 13, 2010
8552 posts
11762 upvotes
GTA
I'm sure that there is a toll free number for HST you can call. This is too important to trust any replys you get here. I think this page has the correct phone number under Business Enquires http://www.cra-arc.gc.ca/cntct/phn-eng.html#h2
Deal Fanatic
Aug 21, 2007
6054 posts
853 upvotes
Markham
request doesnt make alot of sense...any HST he pays is a straight offset to the HST he collects...either reducing his net amount remitted OR increasing/creating an hst refund...either way no impact

possibly an early sign of cash flow issues?
Sr. Member
Jul 10, 2005
763 posts
123 upvotes
Toronto
Unless the client is not registered for HST, meaning yearly revenue of less than 30k...
Deal Addict
Feb 5, 2009
2808 posts
940 upvotes
Newmarket
The client may be in the exempt industry that is why it may make a difference for him
. this seems to fall under commission s and it may be exempt in some cases, for example insurance brokers earning commissions for sale of policy can't charge hst but they would charge hst for hourly consulting
Your client may have a point, it depends.
Deal Addict
Oct 29, 2010
4475 posts
811 upvotes
Homerhomer wrote: The client may be in the exempt industry that is why it may make a difference for him
. this seems to fall under commission s and it may be exempt in some cases, for example insurance brokers earning commissions for sale of policy can't charge hst but they would charge hst for hourly consulting
Your client may have a point, it depends.
I'm guessing the client is clueless about how HST works.
I've worked with a doctor before and we also shared profits and at some point he was telling me he wanted a bigger share cause of the HST he pays. I told him it doesn't work that way and he argued for a very long time and even sent me his accountant to explain to me that he needs a bigger cut cause of the HST.
I told his accountant the story and he was shocked that the doctor has no idea what he was talking about.

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