Cost of Good Sold with Taxes?

by Kathy
(Leamington, ON, Canada)

I sell Avon and am doing 2009 taxes (late). I put my net sales in without taxes.

So, now for the purchases made during the year; do I include GST/PST in this amount?

image of fancy scroll lines

Hello Kathy,

It depends whether you are registered for GST/HST or not.

Yes, if you are NOT a GST/HST registrant, then any reasonable amount you paid in your pursuit to earn a profit is a valid expense. That means any sales tax paid on expenses and assets is a valid expense.

You may want to consider voluntarily registering for GST/HST so you can claim your input tax credits.

No, if you ARE a GST/HST registrant, you do NOT include the sales tax expense as you will claim your input tax credits when you file your GST/HST return.

Remember to make sure you have removed all personal use / consumption of your products, as they are not deductible for business purposes.

I wish you much success with your business venture.

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