Charging tax in Canada
Thread poster: Jenna T
| | Jenna T
Local time: 13:09
French to English
From reading around I have discovered that you have to charge GST for your freelance work if your income is over $30,000. My question is does this $30,000 include income from all source (ie if you have a steady job as well) or from your freelance work alone? Thanks.
| | ViktoriaG
Local time: 13:09
English to French
| The amount has changed || Jun 15, 2007 |
If I am not mistaken, the $30000 has changed this year to $35000.
You can still charge the taxes if you make less than this amount - this has an advantage and a disadvantage. The advantage is that you are putting aside the amount for taxes that you would have paid quarterly or at the end of the year (as long as you really put the amount paid in taxes into a separate account you never withdraw from or a similar solution - an ING Direct account is great because you can make substantial interest on that amount), so it's not as hard on you as coughing up a larger amount to pay at the end of the year. The disadvantage is that you will have a bit more paperwork. Personally, I don't think it's worth it unless you invest the tax money until you have to pay it to turn it to your advantage - but then again, you can do this without charging the taxes, by taking more or less 20% of your invoice amount and putting it aside in a savings account.
If your business income is below that amount, it is probably best not to charge the taxes.
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| Charging tax in Canada || Jun 15, 2007 |
It is my understanding that you may only charge taxes based on where your customer is living (and not your province of residence).
For example, if you live in Quebec and your customer lives in Alberta, you cannot charge QST. However, if you live in Ontario and your customer lives in Quebec, you can only charge QST if you are registered with Revenu Québec.
That is for Canadian customers. Of course, if your customer lives in the US or any other foreign country, no taxes should be charged since only Canadian individuals/companies are subject to such taxes.
Personally, less than 5% of my income comes from Canada. It is an interesting exercise to calculate how much income comes from Canadian customers and this could be another factor helping you decide whether or not it is worth registering to charge/claim GST and/or QST.
Note: I found this link about exported services that might interest those who are curious about this matter:
[Edited at 2007-06-15 22:43]
[Edited at 2007-06-15 22:44]
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