T2125 Form and Sales Tax

by Clare
(Edmonton, Alberta)

Entering Expenses Into T2125 Form

When entering expenses into the T2125 form, do I include the GST in that expense?

image of fancy scroll lines

Hi Clare,

It depends on whether you are a GST/HST registrant or not ... and how you have kept your books.

You are Not a GST/HST Registrant

Let's start with the easiest first.

If you are not a GST/HST registrant, it means you do NOT collect GST/HST. Any GST/HST you pay is posted as part of your expense as you can't claim ITCs ... so yes the sales tax is included on form T2125.

You are a GST/HST Registrant

If you haven't been keeping a set of books throughout the year ... and prepare your tax form T2125 by making tape listings to calculate what goes on each line, then the GST/HST will likely be included in your line totals. You will need to back out the GST/HST paid as you should have already claimed it on your GST/HST report.

You will also notice that in Part 1 there is a spot to subtract the GST/HST if it is included in your sales total (A). If the tax is not included in your sales total, you just leave this line blank.

If you have been keeping a complete set of books using one of the popular small business accounting software packages, you should be able to print out a report that gives you your tax information. You would then just input it on the appropriate line.

Just remember that you must backout any personal expenses or input tax credits you have already claimed.

I hope this helps Clare. Follow the links I've given for more detailed information. If you don't understand something I've said, just post back here and ask.

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