GST
Why does everyone hate the GST?
You always make a profit
and you can organise it to minimise the hassle.
* Worried about the HST?
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If you make more than $30,000 from self-employment, you have to register. Otherwise, it’s your choice.
The GST got very bad press at the start, and it continues to have a bad reputation.
But look at it: your engagers pay you GST on top of your gross fees,
and at the end of the year you pass on to the government GST on your net fees, after expenses.
You end up keeping the GST you paid out to the stores through the year.
What’s not to like?
There’s a booklet covering General Information for GST\HST Registrants, but for now:
You have to register if you make more than $30,000
in four consecutive quarters, gross, from all your self-employment, including income from working abroad.
The GST/HST people share the database that has your income tax data, and every so often they go trolling for slackers.
If you go over $30,000, by however little, even if it’s just once, they can assess you as if you were registered way back then.
A few years ago, many of the Shaw Festival acting company were reassessed three years back or more.
If you register
If you are a painter, and an actor, and a waiter for a catering company, you are running three businesses.
If you register for the GST/HST, all three will be registered.
Whether you received it or not, you have to pay GST on all your Canadian self-employment.
(Once you’re registered, foreign income isn’t counted.)
The only reason for not registering is if you often work for individuals or organisations
who aren’t registered. If they don’t pay you the extra, your $100 bar gig becomes $93.45 plus GST.
Most engagers are registered and they don’t sweat paying you GST – they get it back when they do their GST returns.
When you work outside Canada, you don’t charge GST.
If you make something and export it, you don’t charge GST on it.
However we are told by ACTRA that if performers record a production in Canada,
including commercials, for use only out of the country,
you do charge GST on the session fee and on the residuals.
The theory being that your work in Canada is GST-able,
and the production is made up of your work and other things, and then exported.
If you register effective January 1, you avoid having to change tax rules in mid-year,
The registration form is huge, but asks for only your identification, what you made last year,
and when you want your registration to start.
You can register by phone 1-800-959-5525 – they’ll give you your number immediately and confirm it by letter.
Before calling, be ready with the answers in their application form,
(which we have put some notes on).
You can register online,
or if you want to register by mail, here’s the clean downloadable blank.
By default, you’ll be put on the Simplified Method, filing annually.
Simplified Method
Your GST payable is the difference between the GST you received with your income
and the GST you paid out on your expenses.
When you calculate your income tax, you remove the GST from both your expenses and your self-employed income.
Or you can choose the Quick Method.
If your expenses are less than 45% of your income you‘ll pay more GST, but the convenience may be worth it.
You can choose the Quick Method as you register, or change over with this form.
Quick Method
Here’s the full scoop on the Quick Method
The Quick Method is a flat–rate percentage of your income,.
At tax time, you send CRA 2.6% of your gross income
(including GST) up to $30,000, and 3.6% after that.
And that’s it!
Some people use the Quick Method and choose to file quarterly, instead of each year.
By tracking their income and doing a small sum every three months, they can be sure things are under control.
Here's the example from above, but using the Quick Method:
Easy peasy, but it cost you $75 in GST
You’ve registered. Now what?
Tell your engagers your GST number, and put it on your contracts and invoices.
If you have an agent or gallery, give them a copy of the confirmation letter from CRA.
Visual Artists and Writers
Co-operatives like CanCopy, SCAMPC or CAR/FAC deal with the GST in your royalties.
Performers
Residual payments should have GST added,
even for work done before registration.
The residuals handled by ACTRA Performers’ Rights often don't have GST added.
When they don’t, because ACTRA Frat couldn’t collect it, you should take the GST out of the fee.
(Don't forget to claim ACTRA Frat’s fee as an expense.)
Musicians
SOCAN deals with the GST in your royalties.
Music lessons are GST exempt. This does not include singing teachers.
If your only source of self-employment income
is teaching music, you are not allowed to register to collect GST.
If your self-employed income is only partly music teaching,
you don’t charge GST on your music teaching fees
and you can’t claim the GST you spent on your teaching expenses.
The Return
Send this in either annually at the regular tax time, or quarterly if you prefer,
you’ll file a post-card sized return asking for four income and expense figures.
GST/HST
(The HST is Harmonised Sales Tax -- GST plus provincial tax, which applies in some provinces.
If it does in yours, or if you’re a Quebecker using QST, get the details from the QST and GST/HST Guides.
– we’re using the GST figures, but the principles are the same.)