Expenses Over Income

by Small Independent Contractor
(Alberta, Canada)

How To Prepare My GST Return

How To Prepare My GST Return

Good day. Hope you can help me with this. I'm a bit confused on how to do my returns.


I'm a small Alberta contractor in one company. I do charges for GST/HST on all my service.

My question is, do I have to less the amount of my expenses (without GST) to my total sales before getting the GST/HST that I have to pay? For example, I made $10,000 sales (with GST included) and I spent $1000 (without GST) and I transfer another $1000 to my personal account from my business bank account. Do I have to less the $2000 to $10,000 then get the GST of the remaining balance for my GST/HST return?

$10,000 (total sales with gst included)
-$2000 (expenses without gst and bank account transfer)
=$8000x0.05 (GST% in Alberta)
=$400 (reporting return)

or

$10,000 (total sales with gst included)
x 0.05 (GST% in Alberta)
=$500 (reporting return)

Please help.



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I am hoping this isn't a student cheating on an assignment (if it is you are not doing yourself any favors by cheating - sit down, read your textbook, attend your lectures then do your assignment) but really a small business owner. Assuming you are a GST registrant with a valid GST registration number:

If you are tracking your GST using the regular method and not using the Quick Method of reporting here is how you report your GST Form GST34:

Line 101 Sales excluding GST = $10,000 / 1.05 = $9,523.81 as you said the $10,000 included the GST collected

Line 105 Total GST collected = $9,523.81 x 5% = $476.19 reports how much GST you collected on your sales

Checkpoint on work - Line 101 and Line 105 total $10,000 = Sales before GST plus GST collected

Line 108 Total Input Tax Credits = $1,000 x 5% = $50.00 assuming you have valid receipts showing what you purchased, how much tax was paid and that have you have proof you paid for the purchase or will pay for the purchase in the near future.

Line 109 Net Tax Assessed $476.19 - $50.00 = $426.19

You need to remit the amount owing on line 109 to CRA by the compliance deadline.

The $1,000 is an Owner's Contribution and recorded as such. It is not subject to sales tax as it is NOT a sale. (See Four Common Bookkeeping Errors.)

I hope that helps and makes things a bit less confusing for you.

Comments for Expenses Over Income

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Jul 22, 2015
 Service with no GST
by: Anonymous

That helped me a lot. Thank you for that. There is one more thing.

Let's say someone did a service for me but he didn't charge me for the GST. At the time of my GST/HST Reporting, should I have to reduce the amount of the payment I did before getting the GST out of it? Let's say my total sales with GST is $1050 so my GST is $50. But then I paid someone of $200 and he didn't charge me for GST. Do I still have to remit the $50 GST even after paying $200 or do I have to reduce the $200 to $1050 and get the GST of the total.
Jul 27, 2015
 Service with no GST
by: Lake

You can't claim something you didn't pay. If GST was not charged there is no input tax credit to report on line 108 of your return.

Please take the time to read about what constitutes a legitimate receipt for CRA purposes by following the link above called "assuming you have valid receipts".

It sounds like you are doing your own books to save money but don't have a grasp on GST basics. It is a short sighted savings. If you are audited down the road in three or four years for sales tax and have made basic errors for the ENTIRE audit period, the "pain" you will be feeling is not worth the bit of money you saved by doing the books yourself.

Please consider hiring a bookkeeper to do your books.

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