When to Charge GST/HST
(Edmonton, Alberta, Canada)
When to Charge GST/HST Can Be Puzzling!
Take CRA's Questionnaire - Should you register for a GST/HST account?
I am a sales estimator sub-contractor. I've been invoicing my boss for my work this current year. I have made over the $30,000 mark and I have obtained my G.S.T. number.
Today I go to invoice my boss on the GST owed to me from him. He tells me that his accountant has advised him that he does not have to pay me GST on the first $30,000. He said he will only pay me on the remainder after the $30,000.
I thought it was optional if "I" wanted to charge GST before $30,000. So my question is: Does he have the choice to not pay me on the first $30,000? Is it up to him? Or can I bill him for the full amount of GST which is approximately $1650.00?
Hmm a couple things aren't making sense here for me.
First, if you are an independent, self-employed sub-contractor, any work you do is for clients not bosses. You are your own boss. If you have only one client, you may not meet CRA's criteria for being an independent contractor
and may in fact be an employee.
Second, while registering for GST/HST is voluntary prior to earning $30,000, you cannot "backbill" GST
. You can only charge GST on sales ... and claim ITCs on purchases ... from the date you became a GST/HST registrant
. Once you ARE a GST/HST registrant, you must collect GST/HST ... it is NOT optional.
Third, GST/HST is a neutral tax
to registered businesses. However, if your client pays GST/HST on amounts that pertain to a non-GST/HST registration period, he will NOT be eligible to claim the ITC ... meaning the sales tax would not be neutral to him.
I hope my pointers help you answer your questions. If you are still confused about anything, please post back here using the "comments" link below.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.