# Big time GST/HST procrastination and mess



## Chris (Oct 28, 2013)

Greetings,

I have a big G.S.T./H.S.T. mess that I would like to be advised on. Here is my story: 

I started a courier service, a sole proprietorship about eight years ago which primarily delivers takeout from multiple restaurants to end customers. I have delivery drivers that I dispatch to the restaurants. A restaurant pays the delivery driver a cash delivery fee and the driver owes me a cut of approximately $1 to $2 per delivery. This cut is my income, quite simply.

The $1 to $2 commissions comes out to between $25 000 and $55 000 a year depending on the year. My net income was quite a bit less. I never, after all this time, registered for GST and only registered for HST THIS YEAR. Even after registering, I still have yet to collect or submit any HST.

Not that it really matters at this point, but the reasons for this are that I was initially misinformed about the cutoff point to require registration for GST ($30 000 net vs. $30 000 gross. I was a very young and disorganized manager of my business at the time). Then, I was given differing opinions on whether that $1 to $2 commission is something that would be considered a sale or not and would require registration and collection of HST or not. I procrastinated further, for fear of repercussions upon a voluntary disclosure (legal as well as amounts to pay that I didn’t have. The procrastination and disorganization just went on forever. I had no ill intent, really. I am quite willing to pay taxes (I even disclosed the tip income I earned when filing my income taxes; which I have kept up with) and I'm quite willing to, now, make a voluntary disclosure that is accurate in regards to GST/HST. I have questions about what to do about the past and how to properly organize my bookkeeping and taxation in the present. 

In a voluntary disclosure for GST/HST, is a request to submit less than what is owed a possible thing to request, being that collection is impossible now and it's all just coming out of my own pocket? For example, can I say something like “I’ve failed to register and collect so and so amount, and have no way of collecting it. I can’t afford the full amount but I’m requesting to offer x amount of dollars”? In other words, can a voluntary disclosure include a lesser amount based on my ability to pay?

How to calculate G.S.T. for my situation? Is it accurate to charge the driver HST or include HST within the $1 to $2 I get from the driver in commission like I’m hoping to? Or must it be calculated based on the approx $5-$6 that the restaurant is paying the driver; rates which I determine and set? If it’s the latter, then I’d be looking at being responsible for GST/HST on as much as $150000 per year of sales. (for 8 years). I’m seriously hoping there’s a way around that being the reality since my financial situation is that of being in the red. And quite a ways into it. 

I have received mail requesting my HST submissions since registering approx 8 months ago and I called revenue Canada to ask for a month to get that organized and submitted. They said they will make a note of that but that it doesn’t necessarily stop any action against me. What would that action be? And would I have an opportunity to reconcile or would serious action be taken all at once?

My income tax situation, just for further information about my situation, is that of a back tax payment arrangement of $650 per month and I owe 10 to 15 grand still, and I still need to file for 2012. And my financial situation is bad. I have about $40 000 in debt and heavy monthly debt payments. My business is growing finally and I’m earning about $4000 a month net. And I can see myself pushing that to $5000 or even $6000 optimistically. 

Any advice on how to proceed would be wonderful. I’m planning to find a GST practitioner and make a voluntary disclosure but want to inform myself as much as possible first. 

I’ve been told I could just register as a corporation anew and sort of forget about the past. I’m leaning much towards transparency. 

My 1st goal is avoiding legal problems. A reasonably distant 2nd is considering costs. 

On a separate not, for an employee that I was paying cash to dispatch (which only happened recently- past year), should I go back and pay all the deductions myself on her wage which I never did? I registered for both GST and payroll about half way through her 12 month employment and, again, procrastinated on how to back charge all of that. Furthermore, will it be problematic to claim the expense of her employment on my income tax seeing as it wasn’t on payroll? I did tell her from the beginning that I was likely going to get her on payroll properly so I can still ask her for those deductions back, potentially. Can I even submit and handle employee deductions in retrospect?

Your knowledge on these matters is greatly appreciated. 

Thanks


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## none (Jan 15, 2013)

Get an accountant.


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## Four Pillars (Apr 5, 2009)

Ditto. Get an accountant.

Commissions don't involve HST or GST, so I guess the issue is are you providing a service in which case there is GST/HST implications or are you making a commission which won't involve HST/GST.

Kind of sounds like you are providing a delivery service to the restaurant which should include HST/GST on the total delivery charge and then paying the drivers from that amount. 

As for dealing with the CRA, whenever I've had an issue, they have been fantastic to deal with. Of course, I've always be able to easily rectify the issues - they might not be as nice if you owe them money you can't pay.


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## wendi1 (Oct 2, 2013)

Oh, sweetie. Don't procrastinate any more. Get that smart accountant. Let them handle it. This is going to be expensive, so start saving your pennies.

I also have had no problems with the CRA, but as helpful as they are on the phone when you are asking questions, they can turn nasty fast, and stay that way.


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## MoneyGal (Apr 24, 2009)

You need an accountant. We don't have enough information or knowledge to be able to help you. You may also need a ruling from the HST division about whether your service is HST taxable and, if so, how the rate is calculated (I mean a ruling distinct from an opinion from an accountant, tax laywer, or individual CRA agent). 

Just FYI, the time for voluntary disclosure on your part has almost certainly passed. They have requested that you file a return or returns. Thus, your actions are not now considered "voluntary," they are in response to an enforcement request from CRA. Much more information (this is a link to the voluntary discloures information circular): http://www.cra-arc.gc.ca/E/pub/tp/ic00-1r3/ic00-1r3-e.pdf


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## sags (May 15, 2010)

Hate to say it........but you may be in a situation where bankruptcy is your best option.

An accountant should be able to advise you of that........or send you to a bankruptcy trustee.

Given the information you have provided.........your liabilities greatly exceed your assets.........and your ability to pay is not a given.

It would be best not to procrastinate and proceed before CRA decide to seize your bank accounts and assets.


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## marina628 (Dec 14, 2010)

Starting a business should never be taken lightly and looks like the OP made a mistake so many do and use all fund as if it is theirs to spend freely.Get an accountant to sort you out and work hard to increase your sales and give this extra revenue to CRA until you sort out your tax situation.Regarding the person you paid cash to I would hold off doing anything until your accountant can advise you.


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## Chris (Oct 28, 2013)

Thanks a lot everyone. It's much appreciated. I'll take that next step and get a professional.


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## sharbit (Apr 26, 2012)

This is a simplification but GST is based on net. Based on what you've written, if you have proper receipts you wouldn't be in a terrible situation in regards to the HST thing. Regardless, find an accountant and good luck.


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