H&R Block Insight

Starting a new business means making major decisions such as arranging financing, finding commercial space and coordinating suppliers. Once you open the doors, managing your sales and stocking enough inventory is just part of your business.

Most small businesses also need to consider the Goods and Services Tax/Harmonized Sales Tax (GST/HST). The question is - do you need to register for GST/HST?

There is no simple answer. You have to register for GST/HST if, as a sole proprietor:

you provide taxable supplies in Canada; and
your total revenues from taxable supplies exceed $30,000

Before you register for a GST/HST account, you need a Business Number (BN). Both of these numbers are obtained through the Canada Revenue Agency (CRA). Once you become a GST/HST registrant, you will have to familiarize yourself with reporting periods, GST filing requirements, and when to remit your GST amount.

Reporting periods are the time intervals for which you file your GST/HST returns. The CRA will assign you a reporting period when you register for GST/HST.

For each reporting period, you have to prepare and send in a GST/HST return, to the CRA, showing the amount of GST/HST you charged or collected from your customers and the amount of GST/HST you paid or owe to your suppliers. You receive credit for the GST amounts you have paid out as part of your business activities.

The CRA will automatically send you Form GST34, GST/HST Return for Registrants, which includes pre-printed information about your account. But you still have to file your return by the due date even if you do not receive your personalized return on time.

If you are reporting monthly or quarterly, you have to file your GST/HST return and remit any amount owing no later than one month after the end of your reporting period.

Depending on your situation, you may have up to four different options for filing your GST/HST return and remitting any amount owing. By mail, at your financial institution, using GST/HST Netfile and Telefile or using Electronic Data Interchange.

If you are having trouble determining what you should do, check out the GST/HST guide RC4022 available through the CRA or find more information at www.hrblock.ca.

Many Canadians enjoy using eBay to sell and buy a wide range of items. In fact, there are some people who have started their own businesses using eBay and can become known as PowerSellers. With at least $1,000 US in sales per month, PowerSellers can qualify for prioritized support services and special promotions.

In 2004, there were 10,000 estimated PowerSellers in Canada. eBay retained all their contact information but it was not accessible by others. Canada Revenue Agency requested information from eBay in 2006 to ensure PowerSellers were declaring the appropriate levels of income for their business.

eBay has challenged the ruling on several points including the fact that most of the information resides on machines in the U.S. This argument has not been successful and eBay has been directed to turn over the PowerSeller information.

Many eBay PowerSellers are already declaring the income derived from online sales so the ruling is not an issue. Remember, income from all sources should be declared on your tax return.

And if you have a hobby that becomes a business, you need to understand the tax impacts and ensure you comply with the Tax Act.

For more information, click here.