Ch. 40 - Sales Tax Flashcards
When registration is required:
each person selling taxable supplies is required to register for GST unless:
- the person is a small supplier.
- the only commercial activity is the sale of real property not in the normal course of business, or
- the person is a non-resident who does not carry on business in Canada
The Small Supplier Exemption
one who’s sales of annual GST/HST taxable sales does not exceed $30,000
Two Methods for smaller entities
- Quick Method
2. Simplified ITC Method
ITCs for Small Businesses - Quick Method Criteria
- annual taxable sales of $400K or less
- not available for professional corps
3 election is required
ITCs for Small Businesses - Simplified ITC Method Criteria
- Taxable supplies in prior year are $1M or less, and
2. taxable purchases in prior year are $4M or less
GST Quick Method Calculation
- Apply the ‘specified remittance rate’ to taxable supplies sold in the year
- Deduct the lesser of:
a) 1% of $30K and,
b) 1% of taxable supplies in the year - Deduct ITCs on capital expenditures at regular GST rates
Simplified ITC Method
- calculation
- exclusions
- fully taxable purchases including GST x (GST rate / [100+GST rate])
- capital expenditures for real property, purchases of zero-rated supplies, purchases of exempt supplies
Place of Supply - Goods
where the goods are delivered or made available for the purchased
Place of Supply - Services
where the customer is located, not where the work is performed
Place of Supply - Real Property
where the property is physically situated
Place of Supply - Intangibles
where the intangible can be used. If there is no restriction, based on where the customer is located
Taxable Supplies - Definition
a supply that is made in the course of a commercial activity
Zero-Rated Supplies - Examples
Taxable supplies subject to a 0% tax rate
- Groceries
- Prescription drugs
- medical and assistive devices
- most exports
Exempt Supplies - Examples
Goods and Services not subject to tax
- sales of used residential property
- financial services
- health and dental services
- Educational courses towards a degree or diploma
Criteria to claim ITCs
- GST must have been paid or payable on the expense
- The registrant was registered when the amount became payable
- the purchase must be incurred in the course of commercial activity
- the ITC is claimed within the prescribed time (4 years)
- sufficient documentary is maintained
GST Filing - taxable supplies dollar marks
over $6M
$6M - $1,500,001
$1.5M and under
GST Filing - reporting period length
- Over $6M - Monthly
- between - Quarterly
- Under $1.5M - Annual
GST Filing - Filing deadline
- Monthly - within one month of reporting period
- Quarterly - within one month of reporting period
- Annual
a) individuals - 15 June of subsequent year
b) Others - within 3 months of reporting period
GST records - retention period
6 years
GST Instalments - Required if:
annual filers have GST owing of $3,000 or more
GST Instalment - Calculations (2)
- 4 quarterly instalments of 25% of prior year owing
2. 4 quarterly instalments of 25%of estimated owing for current year
GST Instalment Payment Deadline
within one month of quarter end
GST Final Payment Deadline
Individuals - 30 April of following year
Others - same as filing deadline
Subsection 167(1)
form GST44 can be jointly completed so no GST is charged on the sale of the business
GST on Transactions with Non-Residents
GST is to be charged on transactions with non-residents if the place of supply is in Canada. If the place of supply is outside of Canada, it is zero-rated
GST on sales of Real Property
Residential
Commercial
- Residential
a) on new residential property, GST is charged
b) on used residential property, it is exempt - Commercial property includes GST is a taxable supply and attracts GST
