# GST Collection as Contractor/Sub Contractor



## KingTea (Mar 6, 2015)

Hi there, long time lurker first time poster.

I have seen similar questions answered, but wanted to touch on my situation specifically.

I live in Alberta, and perform services as a contractor for a company out of Saskatchewan, let's call them Biz inc.. Biz inc bids on jobs in Alberta, and when they get the jobs they have me perform the work. The work is generally done for american companies with franchises in Canada (7-11, Wendy's, etc.). Biz inc and myself have an agreement in which they pay me x amount of dollars for hourly and travel for these jobs, however, nowhere in our agreement does it touch on the matter of GST.

I have a GST account, and am required to pay GST on this money at tax time.

Now, the employer is telling me that since they do not get paid GST from their clients on these jobs, they are not required to pay me GST, and the GST has to come out of my pocket come tax time.

I just wanted to confirm if this was, in fact, true.

Thanks in advance


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## leslie (May 25, 2009)

There is no cost or benefit from either the collection or payment of GST on invoices. It should just flow in/out the government on a net basis. So your employer is being 'fishy'. He should not care.
His situation and who he works for has no impact on you. If you bill GST he has to pay it. If you do not bill for GST when you should, you will land in big doo doo. This stuff does get audited.


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## wendi1 (Oct 2, 2013)

If you bill less than $35K, you do not have to collect or remit GST.

Biz, however, is certainly billing more than $35K. I would call up CRA, and ask them to explain it to them.


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## KingTea (Mar 6, 2015)

Great, thanks alot guys!


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## Numbersman61 (Jan 26, 2015)

http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-14e.pdf
Once you are registered for GST you must charge GST on all invoices (page 11)


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## wendi1 (Oct 2, 2013)

Until you de-register.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/cncllng/menu-eng.html#hwndwhn


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## VideoTaxJoe (Jun 24, 2015)

In this situation it really looks like Biz Inc. is getting bad tax advice…and there are significant implications for both you and “Biz Inc.”

A)	While it is true that GST doesn't generally need to be paid on products exported to foreign jurisdictions, the same isn't true when a service is provided to that foreign corporation relating to real estate or products located in Canada. It really depends on what types of services are being provided…but it sounds like they would be caught. Biz Inc. should probably be charging the foreign companies GST as well.

This is a huge problem for Biz Inc. because they could be held liable for a ton of uncollected GST over the years on those contracts....plus all of the other contracts they have in the rest of Canada that are probably being treated incorrectly.

B)	In terms of their payments to you, I can't think of any situations or reasons why the fact that Biz Inc. is being paid by a foreign corporation dissolves you of your responsibility to charge GST.

In the case that Biz Inc. should be charging GST to the foreign customer, they should get credit for any GST paid to you. In the case that they shouldn’t, they should still be able to get a refund from CRA for GST paid to you. In other words, Biz Inc. should not be any worse off by having to pay GST to you.

I don't know how you can convince Biz Inc. to do it, but they really need to get good advice quickly...before they put both themself and you out of business. 

Perhaps point them to section entitled “Services provided in whole, or in part, in Canada” in CRA Guide RC 4027 (http://www.cra-arc.gc.ca/E/pub/gp/rc4027/rc4027-13e.pdf) 

Wish I could give you better news, don't shoot the messenger!

On a side note, you should consider using the "quick method of accounting" for GST purposes. This could save you quite a bit of time and money. There are comments on it in the CRA guide mentioned above.


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## domelight (Oct 12, 2012)

KingTea said:


> Hi there, long time lurker first time poster.
> 
> I have seen similar questions answered, but wanted to touch on my situation specifically.
> 
> ...


 I would suggest you seek professional advice, it is likely you do need to collect HST it is just that the US company refuses to pay it. That being said service contracts sometimes have exceptions, for example if a US company sells a furnace to a Cdn person and the Cdn buys a service contract directly from the US entity as part of the original purchase, then the US company can sub out the work to a cdn contractor and said Cdn contractor does not have to collect HST. But your not sub contracting to the US supplier, you are sub contracting to a cdn contractor who is sub contracting to the US supplier.
You should seek professional advice specific to you. You can always phone CRA and explain, but if you do this ask the section of the act they are referencing and then reference those sections. DO NOT take CRA at their word, they are wrong all the time and in an audit what someone told you over the phone with no evidence will mean nothing in an audit.


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