Canada Amateur question - Please help

[Karim]

I have a small company (a one man show really) but I incorporated and its time to do my year end.

Say I invoiced my clients $55,000 including HST tax. When its time to do my year end, do I owe back the 13% that I charged my clients as well as 13% on the profit I made? So a total of $14,300? (That sounds steep) Of course I'm not deducting expenses for this example.

Thanks for your help!

 

[DerrickWD]

Not an expert, but I assume you would remit the 13% you charged customers to the taxing authority. Don't think you would have to pay a sales tax on your profit, but you will pay an income tax on your profit.

 

[ladyrider]

In the US (I assume this works the same for HST) you make a sale of 2,000 and collect 200 for sales tax (or HST) and when you post the transaction you book the sale into your profit and loss statement (income account) and the HST tax collected into a liability account. At the end of the month you remit the HST to the taxing authority. Sales taxes have NOTHING to do with your profit or losses. That's not your money - you take it in on behalf of the taxing authority and you pay it out to them

 

[jwmca.com]

Karim:

1) The HST you collected from customers is the amount you put in your hst return as collected.

You know add up all the hst you paid from your expenses and enter that amount in the hst return as hst paid.

Whatever the difference is what you owe the tax man or the tax man owes you.


2) Your corporate tax return is a separate return. HST collected is not income. It Is a liability you owe back to the government.

Your income on your corporate tax return will be $55K minus HST collected.

All of your expenses on your corporate tax return are to NOT include HST.


Does that clear things up for you?