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If you expect your total self-employed income before deductions — from all your worldwide professional earning activities — to be greater than $30,000 in any twelve-month period, you must register for Goods and Services Tax (GST).
After registration, Canada Customs and Revenue Agency will notify you of your status. If approved you will be given a GST number to be used on all invoices for service.
You may register if it is less than $30,000. A phone call to your local tax office is sufficient to begin the registration process.
The intent of the GST legislation is that it should not affect your income. You collect tax on behalf of the Government of Canada, and you get back the tax charged to you by others. This means that adding GST to your bills should not bother most of those purchasing your services, since they can claim it back when filing their own GST returns.
Preparing the GST return is a simple matter, although a nuisance, and GST bookkeeping is slightly more complicated. However, there are a number of choices on how to calculate it and how frequently to file it.
FACT
If you are registered, all services for which you charge must include 7% GST tax over and above the fee/cost of service(s).
FACT
Caution: If you collect GST, keep it separate from earnings. There is nothing more upsetting than to have to dip into what you thought you had earned to pay the GST.
TIP!
It is advisable to ask a specialist for help in getting started.
Article originally contributed by Oliphant + White
LINKS:
Canada Revenue Agency
See - Information for Business Goods and services tax/harmonized sales tax (GST/HST)
http://www.cra-arc.gc.ca/tax/business/topics/gst/menu-e.html
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