How do I file for 2 months of contract work?

[leaherridge]

From November-December 2015 I was a contract worker for a company that I am now an employee for. I invoiced them for my services and included 5% GST. How do I go about filing this? I am not interested in having my own business set up since it was only 2 months of work, but I would of course like to file this properly. Can you assist?

[Delphision · Accepted solution]

You may have painted yourself into a corner.  If you made less than $30,000, you should not have registered for GST.  If you did not register for GST, you should not have collected it.  Since you did collect it, and since the company that contracted you will undoubtedly claim that back, you must remit that GST if you have not done so already.

Since you actually invoiced your client and received payment, you must file as self-employed for this income.  You will also be able to write off any expenses you had during that time period. Self-employment is not necessarily a formal "business."

If you did not register for GST, you can make a voluntary disclosure, and attach a cheque.  Provide copies of the invoices and provide the details.

http://www.cra-arc.gc.ca/E/pbg/tf/rc199/rc199-15e.pdf

[leaherridge]

Thanks for your response. I did not register for GST but was told by the company I was contracting for to collect it. I will simply provide them a credit note and a cheque for that overpayment.

Would you be able to provide anymore details about filing as self-employed? The income generated would not be on a T4 slip so should I be filing this under "other income" in the T2125?

[Delphision]

Income on a T4 is not considered to be self-employment.  I can't see if you have the online version or the installed version.  If you have the program open in either one, and click on the income tab, you can scroll down to self-employment.  If you have the installed version, you can click on the forms icon in the top menu and type in T2125.  You want the T2125B for business.  The form is fairly self explanatory.  Enter your income without the GST.

[TurboTaxJeffrey]

My apologies Delphision...but a small correction.  Having revenue of more than $30,000 in a business venture requires one to register for GST/HST, however having less revenue does not prevent one from registering.  In fact many people find it somewhat advantageous, as it can help a small business appear bigger than it is.  People understand paying GST/HST, and it would just be an additional amount collected by the business owner and submitted to CRA, in other words no cost to the business owner...however that business owner can then deduct the GST/HST paid on expenses for the business from the amount submitted.  

There is no minimum revenue required in order to register for GST/HST.  And keep in mind it is revenue that is used to determine if a business is required to register...not net profit.

As to the GST that was billed to the client...likely the easiest way to correct this is to return the amount to the client and issue a revised invoice.  The client would need to be advised anyways, as the invoice would not have the GST account number, and would not pass a CRA audit should the client find themselves subject to one.

[leahm-erridge]

Really appreciate your help!

[Delphision]

I find that most people who register earlier than they need, don't always understand the filing requirements.  It is easy to miss filing dates, easy to add multiple months together including slips missed from prior filings, and fail to file nil returns when the business closes.  I see too many people end up in audits over GST/HST filings.

[TurboTaxJeffrey]

There is no 'too soon' to register for GST/HST.  If people don't understand all the proceedings, that will not change if they wait.  None of my own clients, both personal and corporate, have problems with GST filing.

[TurboTaxJeffrey]

The benefit of being able to claim your ITC's is just as valid for someone with lower revenues as for someone with greater revenues.  And if someone is not charging you GST/HST for their goods and/or services, you know right away that they are small potatoes...however it's not quite so obvious when a GST/HST account has been registered.

[Delphision]

Lucky fellow!  I have had issues with one of mine claiming leftover receipts from the prior year.  Did not work well in the audit. I have several clients with issues with the simplified method, some of which over-pay, and others than under-pay, some that think they don't need to file if they haven't had any sales.  No end to it.  Maybe you are too far up the food chain.