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The ABCs of the Harmonized Sales Tax for Business
| Guest post by: Brenda Parker |
Article Overview: The basics of HST / GST for businesses
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Free Download - Accounting - Beyond the Tax Return By Brenda Parker |
The ABCs of the Harmonized Sales Tax for Business
One of your first considerations when starting up a business is whether or not you need to obtain an HST/GST number. What types of products or services are you selling? Are they taxable products such as bikes or televisions? Are they zero-rated such as bread and vegetables? Most goods or services are either HST/GST taxable or zero rated. For most businesses (there are a few exceptions), you are not required to register for the HST/GST if you meet the definition of a small supplier which includes a business engaged in commercial activities with revenues from worldwide taxable supplies (excluding sale of capital property and financial services) of less than $30,000 in the current calendar quarter and the four preceding consecutive quarters. However, once your revenue exceeds the threshold in a single quarter or over the four previous quarters you will be required to register. The effective date of when you need to start charging HST/GST will depend on which condition led you to no longer qualifying as a small supplier. Contact CRA immediately to register. Once you start charging HST/GST to your customers, keep in mind that it should be clearly identified on the invoice.
You cannot register if you are providing exempt goods or services only such as used residential housing or some professionals services including most medical or dental services .
If a business meets the definition of a small supplier and is therefore not required to register, why would the owner want to? Basically, when a business charges HST/GST, it is also entitled to claim back an Input Tax Credit on the return to recover HST/GST paid or owed on purchases and expenses used, consumed, or supplied in commercial activities to provide taxable and zero rated goods and services. A business that is not registered, cannot claim these credits. In effect, there is a trade off here between perhaps being more competitive if you feel that the customer will prefer going to you if they are not charged the sales tax and incurring extra expenses that you cannot claim back as an ITC.
Once you become a registrant, it is important to take note of when you need to file your returns. CRA will mail your remittance forms with the remitting period and the due date preprinted on the form. Depending on the business, you may be required to remit monthly, quarterly or annually. Make sure that any balances owing on the due date have been paid either by mail, online or at your bank. The form can be filed either by taking it to the bank with your payment, mailing it to CRA or by using their netfile/telefile services.
If you are starting up a business, this should help get you started. However, there is so much more to be aware of as an HST/GST registrant. Become familiar with which products or services you should be charging HST/GST on and at which rate. Make sure your accounting system and point of purchase system is properly capturing what is being collected and what is being paid on your supplier invoices. If you have questions, talk to your accountant or call the CRA. It's better to be informed than to find out after an audit that things were done wrong.
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Article Tags: bikes, calendar quarter, consecutive quarters, cra, dental services, effective date, exceptions, financial services, gst number, input tax credit, invoice, nbsp, televisions, threshold, vegetables
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About the Author: Brenda Parker RSS for Brenda's articles - Visit Brenda's website
Brenda Parker operates Scotia Accounting and Tax Services located in Stellarton, NS, Canada. After graduating summa cum laude from St. Mary's University in Halifax with a B Comm in Finance and a BA in Economics, she worked for a national grocery firm in various departments with her last role being assistant manager of Taxation. During this time she attained her Certified General Accountant's designation. Since getting her CGA, she has worked in various management/accounting positions for government ,public accounting firms, and as controller of a regional hotel chain and a new car dealership. She is a Simply Accounting Certified Consultant and Quickbooks partner. In her accounting practice she has served both large and small clients in a wide variety of sectors. From personal taxes to businesses in manufacturing, wholesale, retail and services to charities and not-for-profit organizations. She has clients from Cape Breton Island, NS to Montreal, Quebec to Calgary, Alberta and in many locations in mainland NS. All information in her articles is offered without prejudice and she advises readers to consult a professional accountant in person in regards to their personal situations. Click here to visit Brenda's website   Remembering Taxable Benefits Tax Time 2009 Q A Moving Expenses Registered charities perform valuable work in our communities Office Technology Q A |
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Re: Online Sales and Marketing vs Traditional
- [quote="ltrahan":31w9r2iz]Hi Evan,
I am noticing that many of the posts in the Sales/Marketing section deal with online marketing, SEM and and SEO and Affiliates. I was wondering if it might be a good idea to separate that section into two; 1) Online Sales and Marketing; 2) Traditional Sales and Marketing[/quote:31w9r2iz]
I second the request...
My entry
- 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read
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Top 19 Copywriting books
- 1. Ogilvy on Advertising. David Ogilvy. Wiley.
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3. The New Positioning. Jack Trout. McGraw-Hill.
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12. Confessions of an Advertising Man. David Ogilvy. NTC Business Books.
13. My Life in Advertising. Claude Hopkins. NTC Business Books.
14. Scientific Advertising. Claude Hopkins. NTC Business Books.
15. How to Become an Advertising Man. James Webb Young. NTC Business Books.
16. The Lasker Story as He Told It. NTC Business Books.
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This should keep you busy for at least a year.
Enjoy!
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