Get the GST Remover here.
Becoming a GST-HST registrant adds an extra layer of complexity to your taxes when you’re running a business in Canada. One of the up sides, however, is the ability to claim back from the Canada Revenue Agency (CRA) any GST or HST you spend on your business.
GST/HST paid on business expenses or assets is claimed back in the form of input tax credits (ITCs). When you file your GST/HST return, you report the amount of tax you collected, then subtract out the ITCs.
But do you really want to go back over all your receipts and try and add up all the GST/HST you paid on every purchase? Of course you don’t. And now, you don’t have to.
To make your life easier, Personal Tax Advisors has created a free tool that will take any tax-in amount for purchases made anywhere in Canada and strip out the sales taxes for you — including the ITCs. And you don’t have to do them one-by-one, either. You can take a total of multiple transactions, so long as they all happened in the same province, enter the total in the GST Remover, and strip out all the sales tax at once.
Purchases in multiple provinces? No problem. Add up a total for each province, run each total through the calculator, and you’re done. Easy!
Read more: How much GST-HST to charge in other provinces
The only thing easier would be to join the Personal Tax Advisors family, of course. We specialize in self-employment and the GST/HST, and we do all the calculations and file GST/HST returns for free.
But if you’re still a DIY-er, have no fear: the GST Remover is here.
Get the GST Remover here. The instructions are included, but it’s pretty simple: all you need to do is enter the province in which the purchase was made, and the tax-in amount. The calculator will break out the sales taxes for you.
Check out our video showing how to use the GST Remover. In a hurry? The main instructions start at the 2:50 mark.
This will be such a helpful tool! You always have the best tips and advice. Thank you.
I registered an HST number under an Ontario Business name over 5 years ago.
I provided Financial Services such as accounting, book keeping, tax preparation. Each year the total sales were way under 30,000. the exempt limit for 4 quarters. Thus I reported my income from other sources such as CPP, OAS, and GIS. The Financial services income was also added to the T1 Income.
CRA has sent me HST bills for $13,000 for the period 2015 to date.
Can I not show my annual Financial Services, income which was less than 30,000. in any 4 quarters and show that I claim the Small Supplier/ Financial Services exemption, for the same period that CRA has sent me a tax bill for?
Hi Lester. I’m sorry this happened to you. The problem is that the $30k threshold only determines whether or not you’re obliged to register in the first place. Once you do register for the GST/HST — whether you were obliged to do so or not — you must collect GST/HST on ALL taxable self-employment revenue. At that point it doesn’t matter if you’re below the threshold.
If the amount that CRA has assessed is far too high, it’s probably because you never filed GST/HST returns (which is likely, since you weren’t aware you needed to file). You definitely don’t have to accept CRA’s bills as they stand, but the only way to get them corrected is to actually file the GST/HST returns.
So the first thing I’d advise is that you file the GST/HST returns, showing your business revenue and the amount of GST/HST you should have collected. You will have to remit that, I’m afraid. You can make things a little better by splitting that income out into a fee+HST. For example, if you billed $100, you could report that as $88.50 in revenue plus $11.50 in HST (you’ll see that mathematically, $11.50 is 13% of $88.50). In this way you’ve accounted for all amounts collected, so you won’t get in trouble; plus the amount of GST/HST you need to collect is a little less than if you said you charged $100 in fees, in which case you’d need to remit $13 in HST. You might even be able to adjust your income tax returns downward a bit, since your fees will be showing as lower.
I hope that makes sense. For what it’s worth, Personal Tax Advisors does these back filings and T1 adjustments regularly. If you would like us to take a look, please get in touch via our contact page so we can see what can be done.
Going forward, if your self-employment revenue is going to stay below $30,000/year, I recommend you contact CRA and ask to close your GST/HST account at the earliest possible date.
I recently dipped my toes into freelance work as a side-hustle, and I’m not registered for GST/HST. I did one project this year, and the client paid my flat rate invoice, but they added 13% HST to what they paid, despite me not requesting it, or even having an HST number. If I stay below the $30,000 minimum, for the year (which I will), and I am not registered to collect GST/HST, can I just treat the extra they added as normal taxable income, or am I now compelled to register for GST/HST (because they added it) and remit all of it to the CRA?
Also, this was paid to me more than 30-days ago, and the CRA website says that you can’t collect HST more than 30 days before registering. Judging from Lester’s situation above, I shouldn’t register so I don’t have to deal with the HST payment, as I don’t even have a business number or anything. I’m just wondering about the client claiming they payed it with my info on their records.
You’re correct that you should not have been paid the HST on top of your fee, since you’re not registered for it. You have two options:
1) Return it; or
2) Keep it but include it as part of your revenue
It really should be returned to the payer, since it was paid in error. But if they can’t or won’t take it back, just include it as part of your freelance revenue — you’ll end up paying income tax on part of it, but you’re still ahead.
The payer, on the other hand, won’t technically be entitled to claim it back when they file their own GST/HST return because it’s not legitimate GST/HST — but they probably will try anyway. To be blunt: that’s not really your problem.