GST/HST Issues – Businesses and Individuals

GST/HST Issues - Businesses

 

GST/HST Registrants - Effective Date of Registration

The effective date of registration is important, because it is the date that a new registrant becomes liable for collecting GST/HST on sales, and eligible to claim input tax credits on sales.  If a business charges GST/HST on taxable sales before registering, the effective date of registration is the first date that GST/HST is collected.  Otherwise, the effective date depends on whether the registration is mandatory or voluntary.

GST/HST Issues – Businesses and Individuals

GST/HST Treatment of Coupons, Manufacturers' Rebates, and Gift Certificates

Why do you sometimes pay tax on the full price when you think you're buying something on sale?  Many stores have in-store coupons that they apply, without the customer having to bring the coupon to the store themselves.  Often, when a coupon is applied to reduce the price, the tax is charged on the full price before the coupon.  When a GST/HST registrant is able to receive an input tax credit (ITC) for an item for which a manufacturers' rebate has been received, special rules apply to the ITC.  When a vendor charges GST/HST on the full price before a coupon is applied, they must remit a portion of the coupon amount as GST/HST.

Source: TaxTips.ca

Ontario Economic Update

On November 18, 2010, the Honourable Dwight Duncan, Ontario’s Minister of Finance, presented the government’s 2010 Economic Outlook and Fiscal Review. The update introduces a new Ontario Clean Energy Benefit, equal to 10% of the total cost of electricity, including tax, to eligible residential, farm and small business consumers, effective January 1, 2011. On the corporate side, the update calls upon the federal government to strengthen the integrity of the Canadian tax system by prohibiting transactions that result in the transfer of losses within corporate groups and across provincial borders. This comment responds to the federal government’s Budget 2010 commitment to explore whether the tax system would function better under new rules for the taxation of corporate groups; for example, a formal system of loss transfers or consolidated reporting. Ontario is of the view that any new approach to corporate group taxation must consider the impact on provincial revenues.

The government of Ontario is also committed to modernizing its pension system. For more information, read the discussion paper released on October 29, 2010, entitled “Securing Our Retirement Future”.

The Ontario government is on track for a deficit of $18.7 billion in 2010-2011, which is an improvement over the 2009-2010 deficit of $19.3 billion. The government believes it can eliminate deficits in eight years.

Pay Yourself First!

This means that the first priority when you earn money is to put some of it aside to save for your future.  This is the key to your financial freedom . Use 10% of your gross income for making extra payments on your debt, or 10% of your gross income for saving or investing outside of an RRSP, or 15% of your gross income for making contributions to RRSPs. The reason for using 15% for making RRSP contributions is to include your approximate tax savings in your contributions. Example: Your family income is $70,000 per year.  If you are using your pay-yourself-first money to make extra payments on your debt, you would use 10%, or $7,000. If you want to contribute your pay-yourself-first money to your RRSP, you would contribute 15%, or $10,500.  If you are in a 30% tax bracket, your refund for the RRSP contribution will be $3,150.  This means you are out-of-pocket only $7,350.  If you are in a 40% tax bracket, your refund would be $4,200, and you would be out of pocket only $6,300. So, in order to have approximately the same after-tax money as when you are using 10% of your gross income to pay down your debt or save outside of an RRSP, you will have to contribute about 15% of your earnings to your RRSP.  You can then do what you want with any tax refund. Tax Tip :  Pay yourself first!

Your financial plan should include the following steps: Pay yourself first! Emergency money Define your goals Personal budget Buy a home Get out of debt Save and invest Source: TaxTips.ca