Tax (Canadian) - DPChallenge Forums

Canon EF 70-300mm f/4.5-5.6 DO IS USM

05/06/2009 09:25:05 PM · #1

I have recently done some work for a friend's business and need to invoice him. Can anyone tell me what tax to charge, it's for photography. Is it PST, GST or both?

I don't have a business number and am not registered for tax purposes although he is. I do plan on doing this legit' though so will be keeping all the right records for when my next filing comes.

thanks

cpanaioti

Canon EOS-40D

05/06/2009 09:29:41 PM · #2

Do you have a GST number? If your business earns less than $30,000 you don't have to charge GST.

PST depends on the province as to what it applies to.

05/06/2009 10:00:36 PM · #3

Ah right, I'm in Ontario and supplying the service to someone in Ontario.

I've heard that if you charge GST even without needing to then it can be beneficial when claiming back expenses, is that true? As even if I don't hit the $30K limit I will be paying GST on photography equipment.

So PST is a given and you only charge GST if you have a GST number?

geoffb

05/07/2009 12:33:02 AM · #4

Originally posted by rob_smith:

Ah right, I'm in Ontario and supplying the service to someone in Ontario.

Are you providing something tangible? As far as I know, the Retail Sales Tax (PST) in Ontario only applies to something tangible (i.e. not to services), but someone else might say differently.

Originally posted by rob_smith:

I've heard that if you charge GST even without needing to then it can be beneficial when claiming back expenses, is that true?

Absolutely not. If you haven't registered for GST yet, you don't collect it.

Originally posted by rob_smith:

As even if I don't hit the $30K limit I will be paying GST on photography equipment.

True, which is a good reason to register for it.

Originally posted by rob_smith:

So PST is a given and you only charge GST if you have a GST number?

Exactly!

ETA: Take a look at this; it might help you somehow (if you buy something for resale).

//www.rev.gov.on.ca/english/guides/rst/204.html

Message edited by author 2009-05-07 00:34:42.

05/07/2009 11:23:30 PM · #5

No that link completely confused me, ha ha!

Are you sure you can't collect GST before registering for it? I am going to register for it but would like to charge it sooner.

Also on PST (Retail Sales Tax) I think for photography there is a fine line, as I am providing a service, but then also final images. A marketing agency I know invoices without PST due to the fact they upload their final work via FTP rather than send in images on disk, apparently this has a different tax status due to the fact sending in a disk is a tangible product, whereas uploading them is not?

Can anyone confirm this?

geoffb

05/08/2009 03:33:03 AM · #6

Originally posted by rob_smith:

Are you sure you can't collect GST before registering for it?

When you collect GST, you are simply holding it to later remit to the government. If you are not registered for GST, you have no way to remit it, and you have therefore illegally collected income under the guise of a tax (the CRA will LOVE you!)

Originally posted by rob_smith:

I am going to register for it but would like to charge it sooner.

You can phone the CRA and be set up in 10 minutes. Just be certain you're ready for it (it takes some diligence and planning).

The general rule is that you cannot make a claim on the GST you paid before you registered for a GST number. I've heard there are exceptions (one being capital costs), but I never looked into them too much. Check the CRA site for more info.

//www.taxtips.ca/gst/whocollectsgst.htm
//www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-e.html (enjoy that one!)

Good luck!

geoffb

05/08/2009 03:37:33 AM · #7

Originally posted by rob_smith:

No that link completely confused me, ha ha!

That link only mattered if you're interested in PST exemption for your resold products. You can ignore it if that doesn't matter.

05/08/2009 08:35:02 AM · #8

Originally posted by rob_smith:

...snip... Also on PST (Retail Sales Tax) I think for photography there is a fine line, as I am providing a service, but then also final images. A marketing agency I know invoices without PST due to the fact they upload their final work via FTP rather than send in images on disk, apparently this has a different tax status due to the fact sending in a disk is a tangible product, whereas uploading them is not?

Can anyone confirm this?

If you supply a CD of photos you do not charge PST. I was also confused about that, so I phoned the PST people. Don't hesitate to phone them with questions, they have always been wonderfully helpful to me, as has everybody at Revenue Canada, both Provincial and Federal.

If you do enough reselling (ie buying lots of frames to put your photos in) you might want to get an RST (PST) account. Then you can buy supplies and get the PST back. And/or you can start accounts at your suppliers by giving them your RST # and they won't charge you the PST because you're going to be charging it to your client. PST must ALWAYS be charged somewhere. You cannot buy supplies for your business PST-free. To me, passing the PST along just means more paperwork. I prefer to have clients buy materials (ie I buy the supplies and pass the store invoices along to them, they reimburse me. That way if something fails within warranty, they can go to the store and I'm not on the hook as a go-between. My services/consultations are what my clients pay for.

About GST: Look up "The Quick Method" versus "The Long Method", and "Input Taxes". You start off with the long method by default, where you have to track all of your input taxes to claim them back. I don't have a lot of input taxes, so I switched to the quick method and don't have to track all those inputs. It makes life much simpler.

Check out some government websites, like how to start a business in Ontario.

05/08/2009 08:38:26 AM · #9

Originally posted by geoffb:

....The general rule is that you cannot make a claim on the GST you paid before you registered for a GST number. I've heard there are exceptions (one being capital costs)...

I think the rule is something like, you must make money with the capital item within a certain time period??? Six months???

05/08/2009 08:57:54 AM · #10

Oh yeah, one thing about reselling is that you can mark things up. So you buy a frame at Joe Schmoe's for $10 and don't pay any PST. You turn around and charge a client $20 to have that frame around your $xx.xx photo. Then you add those numbers and charge PST according to that.

Back before computers got really cheap, I used to buy all the parts and build/install them myself to fulfill orders from businesses. I doubled the price on each PC and made a handy profit, then billed hourly to deliver and join them to their networks. But in doing that, I was handing them my invoice and along with that I gave them my warranties. If anything broke, I would go and figure out what it was and fix/replace it, which was OK as I billed hourly for that.

To me, personally, reselling is a pain in the arse unless you can really mark-up a lot. I prefer to supply less tangible stuff. :-)

ETA:
I'm not an accountant, and I don't even play one on TV. So you should verify all of my blatherings with the government. I claim no liability. :-)

Message edited by author 2009-05-08 09:03:08.

05/08/2009 01:06:13 PM · #11

I will file everything exactly as you said then, thanks for the binding confirmation. ;-)

No really, thanks guys, much appreciated.

Canon EF 70-200mm f/2.8L IS USM II

05/08/2009 01:22:54 PM · #12

Originally posted by rob_smith:

I will file everything exactly as you said the....

Maybe we could be cell mates. ;-)

PhotoDave

Canon EOS-5D Mark II

05/08/2009 04:31:38 PM · #13

Originally posted by Strikeslip:

Originally posted by rob_smith:
I will file everything exactly as you said the....

Maybe we could be cell mates. ;-)

Thanks a lot, Im already feeling sick today and you have to go and post that kind of visual, you sick bast*** :P