Any accountant here? Business tax help>?

[dealcatcher]

okay, here's my question

First time for self employment, I purchase my goods from my supplier and pay the GST for my purchase, and then I resell those goods in Canada, which means I also need to collect GST. Is it possible to claim back the GST I paid for the supply or NOT? how?

[blakeatwork]

okay, here's my question

First time for self employment, I purchase my goods from my supplier and pay the GST for my purchase, and then I resell those goods in Canada, which means I also need to collect GST. Is it possible to claim back the GST I paid for the supply or NOT? how?

Do you have a Business Number? Would look similar to this: 89356 6463 RT0001.

If not, to be able to claim GST Input Tax Credits (ITCs), you need to have a GST account with the Canada Revenue Agency. You will only be able to deduct the GST made on purcahses for the business, which could potentially put you in a refund state. ie if you were to have sold $100,000 worth of goods/services, and charged GST at 7%, you would have collected $7,000. If you paid GST on purchases, you would apply that to the $7,000. If, for example, you only paid $5,000 on purchases, then you would file a GST return, and pay the CRA $2,000. Oh, one more thing. If you haven't registered for a GST account, you'll have to let them know, and backdate your remittance periods to account for the GST charged.

It's sorta complicated after that, when you get into 0-rated services, and dealings with the Government as clients. I would suggest if you haven't already, get in touch with your local CGA branch, and talk to them about helping you with the process. It's a 10-minute phone call to CRA, and you'll need your Master Business License, but if you're not comfortable with it, the CGA can do it for you promptly.

[Montague]

Think the above post is correct but as he mentioned best to consult a professional on matters such as this cause I JUST read an article in the newspaper yesterday about a couple who has ordered to pay $150,000 in taxes for GST NOT collected.

If you phone the tax department make sure you get a supervisor and get their name and note time of conversation.

The key is to document everything to protect yourself.

[blakeatwork]

Think the above post is correct but as he mentioned best to consult a professional on matters such as this cause I JUST read an article in the newspaper yesterday about a couple who has ordered to pay $150,000 in taxes for GST NOT collected.

If you phone the tax department make sure you get a supervisor and get their name and note time of conversation.

The key is to document everything to protect yourself.

No doubt.

The problem the OP has is that he has been invoicing GST to begin with, without obviously understanding it.

If your annual sales are below the $30,000 threshold, then you ahve the option of not charging GST, and not getting the GST ITCs in return, or voluntarily charging GST by getting the appropriate <a href=../autolink/redirectpage.php?linkid=51 target=_blank>BN</a> and GST account.

Get some advice from the local CGA. Today. Now.

[dealcatcher]

Do you have a Business Number? Would look similar to this: 89356 6463 RT0001.

If not, to be able to claim GST Input Tax Credits (ITCs), you need to have a GST account with the Canada Revenue Agency. You will only be able to deduct the GST made on purcahses for the business, which could potentially put you in a refund state. ie if you were to have sold $100,000 worth of goods/services, and charged GST at 7%, you would have collected $7,000. If you paid GST on purchases, you would apply that to the $7,000. If, for example, you only paid $5,000 on purchases, then you would file a GST return, and pay the CRA $2,000. Oh, one more thing. If you haven't registered for a GST account, you'll have to let them know, and backdate your remittance periods to account for the GST charged.

It's sorta complicated after that, when you get into 0-rated services, and dealings with the Government as clients. I would suggest if you haven't already, get in touch with your local CGA branch, and talk to them about helping you with the process. It's a 10-minute phone call to CRA, and you'll need your Master Business License, but if you're not comfortable with it, the CGA can do it for you promptly.

Great!!. What about I purchased office equipement? such as Computer system, office desk. is it possible to claim also?

[grant]

Hey man the government has all sorts of pamphlets to answer these questions, you should consider talking to the CCRA & reading the available material first.

[dealcatcher]

Hey man the government has all sorts of pamphlets to answer these questions, you should consider talking to the CCRA & reading the available material first.

GREAT! Do you have any recommendation for the invoice software that you use?

[Jono]

Hey man the government has all sorts of pamphlets to answer these questions, you should consider talking to the CCRA & reading the available material first.

http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-03e.pdf

[dealcatcher]

http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-03e.pdf


Good one! However, i don't understand this statement, please give example?

Zero-rated supplies refers to a limited number of goods
and services that are taxable at the rate of 0%. This means
there is no GST/HST charged on the supply of these goods
and services, but GST/HST registrants can claim an ITC for
the GST/HST they pay or owe on purchases and expenses
made to provide them.

[taxguru]

Good one! However, i don't understand this statement, please give example?

Zero-rated supplies refers to a limited number of goods
and services that are taxable at the rate of 0%. This means
there is no GST/HST charged on the supply of these goods
and services, but GST/HST registrants can claim an ITC for
the GST/HST they pay or owe on purchases and expenses
made to provide them.

Basic Groceries and prescription drugs are the first ones that come to mind. Grocers and pharmacies don't charge GST/HST on the sale of such items, yet they are allowed to claim GST paid on their costs such as rent, utilities, professional fees etc.

Another example would be goods you sell and ship out of Canada, for example <a href=../autolink/redirectpage.php?linkid=78 target=_blank>eBay</a> sales to US or other countries.

[dealcatcher]

Basic Groceries and prescription drugs are the first ones that come to mind. Grocers and pharmacies don't charge GST/HST on the sale of such items, yet they are allowed to claim GST paid on their costs such as rent, utilities, professional fees etc.

Another example would be goods you sell and ship out of Canada, for example <a href=../autolink/redirectpage.php?linkid=78 target=_blank>eBay</a> sales to US or other countries.

"Another example would be goods you sell and ship out of Canada,"

Okay.. so I can claim back the GST that I paid on my purchase from my supplier, because I don't charge any Tax from US Buyers and then I can get those GST back? For example, I bought $100 stuff, and paid $7 GST and sell it to US for CDN$105. So I can get back the GST $7, right?

[taxguru]

"Another example would be goods you sell and ship out of Canada,"

Okay.. so I can claim back the GST that I paid on my purchase from my supplier, because I don't charge any Tax from US Buyers and then I can get those GST back? For example, I bought $100 stuff, and paid $7 GST and sell it to US for CDN$105. So I can get back the GST $7, right?

Yes, that is the way it works. However, as noted above you must first be registered for GST before you are allowed to claim the GST you pay as input tax credits. You don't have to register for GST until your total sales exceed $30,000 in one calendar year but it may be to your benefit if you do; particularly if you are shipping out of Canada or your customers themselves are able to claim input tax credits on the goods or services they purchase from you.

Also, if you are shipping to Nova Scotia, New Brunswick or Newfoundland and Labrador you must collect the 15% HST, even if you are in a province only subject to the 7% GST. <a href=../autolink/redirectpage.php?linkid=28 target=_blank>NCIX</a> made this mistake, was caught, and now collects 15% HST on shipments to the above Atlantic provinces. PEI does not participate in the HST.