Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Nov 20th, 2018 9:51 am
Newbie
Jul 9, 2018
13 posts
6 upvotes
I have a small building for which I received a grant from the town we live in, in order to make renovations to the building. Do you know if a grant like that is taxable income?
Jr. Member
Oct 6, 2015
101 posts
44 upvotes
Toronto, ON
Hi thanks for taking the time to respond. No it is not a corporation, it's a sole proprietorship.
[OP]
Newbie
User avatar
Oct 30, 2017
47 posts
13 upvotes
Ottawa, Ontario
xxgosokxx wrote:
Oct 5th, 2018 3:17 pm
Hi thanks for taking the time to respond. No it is not a corporation, it's a sole proprietorship.
if it is a sole proprietorship, all you need to do is to add a business statement there, T2125. it won't cost too much, when you file your personal tax return, include that in there.
if I do that, I usually charge about $200. message me if you are interested. thank you very much
thank you very much
Philip Kwok, CPA, CGA
[OP]
Newbie
User avatar
Oct 30, 2017
47 posts
13 upvotes
Ottawa, Ontario
SusanM6112 wrote:
Oct 5th, 2018 3:14 pm
I have a small building for which I received a grant from the town we live in, in order to make renovations to the building. Do you know if a grant like that is taxable income?
it depends on how this agreement is, most of the time, it will be a reduction of cost for the renovation, meaning that it will reduce the amount you can depreciate annually. therefore, no direct tax affect to you. for example, if you receive $5000, and your total cost is $10000, the amount of total cost will reduce to $5000 and this amount you will depreciate annually using CRA allowed rate.
thank you very much
Philip Kwok, CPA, CGA
Newbie
Jul 9, 2018
13 posts
6 upvotes
PhilipK796978 wrote:
Oct 6th, 2018 4:30 pm
it depends on how this agreement is, most of the time, it will be a reduction of cost for the renovation, meaning that it will reduce the amount you can depreciate annually. therefore, no direct tax affect to you. for example, if you receive $5000, and your total cost is $10000, the amount of total cost will reduce to $5000 and this amount you will depreciate annually using CRA allowed rate.
Except I won't depreciate anything, because it's my primary residence. So that means, it's taxable, I guess?
[OP]
Newbie
User avatar
Oct 30, 2017
47 posts
13 upvotes
Ottawa, Ontario
SusanM6112 wrote:
Oct 6th, 2018 6:50 pm
Except I won't depreciate anything, because it's my primary residence. So that means, it's taxable, I guess?
if you applied for a grant, and if it is a taxable grant in this case, you will get a T4A
if not, then it is not taxable.
even if you received one T4A for 2018, depending on which box it shows the amount, it might be/ not might not be taxable, the box will indicate that for you.
it should be easy.
thank you very much
Philip Kwok, CPA, CGA
Newbie
Jul 9, 2018
13 posts
6 upvotes
PhilipK796978 wrote:
Oct 6th, 2018 8:55 pm
if you applied for a grant, and if it is a taxable grant in this case, you will get a T4A
if not, then it is not taxable.
even if you received one T4A for 2018, depending on which box it shows the amount, it might be/ not might not be taxable, the box will indicate that for you.
it should be easy.
Thanks for the help!
Newbie
Sep 15, 2018
9 posts
Hello,

Thank you for helping here, its great.
I’m a web developer based in Alberta. I do work from home as I work full time in the different industry.
So, I thought to do home business and use my skills, so few clients now, all of them from Alberta, so I charge them only GST.
2 years ago I got a customer over the internet from ONTARIO who would like to build a website and app for his restaurant, and the agreement was that he does not have money and will pay mine in installments. So I said yes to him, I also told him the project would take me time as I really have a commitment to my work and my other projects.
The project should end in December this year. I’m in the last stage of the app development.
So here is what happened:

Full contact amount: $4000 for the website and the app.
Payment methods: Installments
First payment 30% on the start for the project in 2016.
Payment of 30% in 2017
And 40% in the end of the project.

Stupid me, I charge him only GST so the first 30% and 30% I have included GST 5% only.
Now I know that I had to charge him HST not GST.
So he paid 1200 with GST in 2016
And also in 2017, he paid 1200 with gst.

What I should do, I have called CRA and they said I need to do the following but they did not give me any solid solution, they said I may need to adjust my gst return. Or if the contact said the client pay the hst on the final payment then I can charge him this year in 2018 and claim that.
So really I’m confused, as well my client.
Case 1:
Adjust my GST return for 2016 and 2017. and refund the amount to the client? and does he need also adjust his GST with CRA?
Then I pay the full HST in 2018.? as the contract still not finished yet and there is work and payment pending, so I can collect the full amount of hst this year?

Question: If I adjust the GST and correct the amount collected will that affect my books and income for 2016 and 2017?

Case 2: or Should correct the GST, and include the HST amount that I should be collected in 2016 and 2017 and pay plenty on that. ?


Please help me as I really confused and not sure what to do.
Sr. Member
Nov 13, 2006
790 posts
415 upvotes
loudyca wrote:
Oct 10th, 2018 5:15 pm
Hello,

Thank you for helping here, its great.
I’m a web developer based in Alberta. I do work from home as I work full time in the different industry.
So, I thought to do home business and use my skills, so few clients now, all of them from Alberta, so I charge them only GST.
2 years ago I got a customer over the internet from ONTARIO who would like to build a website and app for his restaurant, and the agreement was that he does not have money and will pay mine in installments. So I said yes to him, I also told him the project would take me time as I really have a commitment to my work and my other projects.
The project should end in December this year. I’m in the last stage of the app development.
So here is what happened:

Full contact amount: $4000 for the website and the app.
Payment methods: Installments
First payment 30% on the start for the project in 2016.
Payment of 30% in 2017
And 40% in the end of the project.

Stupid me, I charge him only GST so the first 30% and 30% I have included GST 5% only.
Now I know that I had to charge him HST not GST.
So he paid 1200 with GST in 2016
And also in 2017, he paid 1200 with gst.

What I should do, I have called CRA and they said I need to do the following but they did not give me any solid solution, they said I may need to adjust my gst return. Or if the contact said the client pay the hst on the final payment then I can charge him this year in 2018 and claim that.
So really I’m confused, as well my client.
Case 1:
Adjust my GST return for 2016 and 2017. and refund the amount to the client? and does he need also adjust his GST with CRA?
Then I pay the full HST in 2018.? as the contract still not finished yet and there is work and payment pending, so I can collect the full amount of hst this year?

Question: If I adjust the GST and correct the amount collected will that affect my books and income for 2016 and 2017?

Case 2: or Should correct the GST, and include the HST amount that I should be collected in 2016 and 2017 and pay plenty on that. ?


Please help me as I really confused and not sure what to do.
just don't do anything.
Newbie
Sep 15, 2018
9 posts
asifnana wrote:
Oct 11th, 2018 9:24 am
just don't do anything.
Did not get that, sorry
Do you mean that I do not have to collect and re file the hst?
I really do not want any trouble with cra in future.

How I can correct this issue, and do I need to charge my client HST on the remaining balance.

Ann what about the old amount alreday paid.
Thank you
Member
Nov 12, 2014
446 posts
248 upvotes
Kingston, ON
Call HST rulings and ask them: 1-800-959-8287
Sr. Member
Nov 13, 2006
790 posts
415 upvotes
loudyca wrote:
Oct 10th, 2018 5:15 pm
Hello,

Thank you for helping here, its great.
I’m a web developer based in Alberta. I do work from home as I work full time in the different industry.
So, I thought to do home business and use my skills, so few clients now, all of them from Alberta, so I charge them only GST.
2 years ago I got a customer over the internet from ONTARIO who would like to build a website and app for his restaurant, and the agreement was that he does not have money and will pay mine in installments. So I said yes to him, I also told him the project would take me time as I really have a commitment to my work and my other projects.
The project should end in December this year. I’m in the last stage of the app development.
So here is what happened:

Full contact amount: $4000 for the website and the app.
Payment methods: Installments
First payment 30% on the start for the project in 2016.
Payment of 30% in 2017
And 40% in the end of the project.

Stupid me, I charge him only GST so the first 30% and 30% I have included GST 5% only.
Now I know that I had to charge him HST not GST.
So he paid 1200 with GST in 2016
And also in 2017, he paid 1200 with gst.

What I should do, I have called CRA and they said I need to do the following but they did not give me any solid solution, they said I may need to adjust my gst return. Or if the contact said the client pay the hst on the final payment then I can charge him this year in 2018 and claim that.
So really I’m confused, as well my client.
Case 1:
Adjust my GST return for 2016 and 2017. and refund the amount to the client? and does he need also adjust his GST with CRA?
Then I pay the full HST in 2018.? as the contract still not finished yet and there is work and payment pending, so I can collect the full amount of hst this year?

Question: If I adjust the GST and correct the amount collected will that affect my books and income for 2016 and 2017?

Case 2: or Should correct the GST, and include the HST amount that I should be collected in 2016 and 2017 and pay plenty on that. ?


Please help me as I really confused and not sure what to do.
Here is how the 2018 final invoice will look....


website cost : 4000
HST 13%: 520
Total Cost: 4,520

Paid in 2016: (1,260)
Paid In 2017: (1,260)

Total Due Immediately: 2,000


When you file your HST return in 2018 show: Line 101: sales of $1,600 (which is 40% of 4,000) and Line 105 HST collected/Adjustments of: $400. This will make your HST all fine with the CRA, the client will have paid you the real amount and everyone goes home happy.
Member
Nov 12, 2014
446 posts
248 upvotes
Kingston, ON
PhilipK796978 wrote:
Oct 11th, 2018 9:51 am
HST or GST charge is based on location of your business, not where your client is. therefore, your office and business is located in AB, and you follow AB 's rule. if you are really concern, you can call HST rulings and tell them the full detail of this, 1 800 959 8287, if they said you should change and charge HST for the Ontario client, let me know and I will guide you step by step.
thanks
That's not true at all - you need to follow the place of supply rules for HST, it's not based on where your business is located at all.
Newbie
Sep 15, 2018
9 posts
Hello,

I have called the number you provided and they advised that I need to charge HST.
Based on this documentation: B-103
Link: https://www.canada.ca/en/revenue-agency ... vince.html

They advised to adjust the GST returns for 2016 and 2017 in my side and get the GST collected back to me. Then invoice the customer in the last invoice and add the HST.

1- Do the client also needs to adjust that in his GST/HST returns for 2016 and 2017?

So in summary this what I did:
In 2016 I created invoice: for the amount: $1200 + 60 (GST) = 1260
Then I filed my GST return and include this amount.

In 2017 I created invoice: for the amount: $1200 + 60 (GST) = 1260
Then I filed my GST return and include this amount.

Balance remaining: $1600 due on November 2018.
The agreement was with my client is to payment when he has money and I also take it easy to build he website and app.

Please advise what is the best way to resolve this, for me and my client.

I really appreciate your help in this.
[OP]
Newbie
User avatar
Oct 30, 2017
47 posts
13 upvotes
Ottawa, Ontario
loudyca wrote:
Oct 11th, 2018 1:29 pm
Hello,

I have called the number you provided and they advised that I need to charge HST.
Based on this documentation: B-103
Link: https://www.canada.ca/en/revenue-agency ... vince.html

They advised to adjust the GST returns for 2016 and 2017 in my side and get the GST collected back to me. Then invoice the customer in the last invoice and add the HST.

1- Do the client also needs to adjust that in his GST/HST returns for 2016 and 2017?

So in summary this what I did:
In 2016 I created invoice: for the amount: $1200 + 60 (GST) = 1260
Then I filed my GST return and include this amount.

In 2017 I created invoice: for the amount: $1200 + 60 (GST) = 1260
Then I filed my GST return and include this amount.

Balance remaining: $1600 due on November 2018.
The agreement was with my client is to payment when he has money and I also take it easy to build he website and app.

Please advise what is the best way to resolve this, for me and my client.

I really appreciate your help in this.
Thanks. ok,
1. client can claim ITC in the current return, no need to adjust previous filed return

so, I guess you will need to adjust your return to include the 8%, $96 for 2016, 2017

the best and the most clearest way is to send your client a new invoice to charge HST for the 2016, 2017 invoice, for the additional $96

note that CRA will charge you interest for the $96

I hope I helped. thanks alot
thank you very much
Philip Kwok, CPA, CGA

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