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?
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.