Solved: I acquired a GST number in the middle of the tax y...

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I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

My GST number came into effect in August and my PST number about a month later.  From that point forward my income and expenses are separated from their GST/PST counterparts.  However all of my income/expenses from the first 7 months include GST/PST. 

For example my total gross sales include GST up until August, then do not include for tthe remainder of the year.  So my total number is mixed.  Same with all my expenses throughout the year.  Am I just overthinking this and it all actually works itself out? 

Or will I need to fill out separate T2125 forms for pre and post registration?

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New Member

I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

I'm not understanding why "gross sales include GST up until August?"  If you were not registered for GST, you should not have been charging GST on your invoices.  In my humble opinion, I would suggest that you strip all of the GST you have collected, and separate the GST from the expenses, and remit the difference.  I suspect that you are likely to be an annual filer for GST so it should look more reasonable.

In order to regularize your invoices, you can forward a copy of your first invoice, showing that you were adding GST to the invoice, and they will happily back-date your registration.

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Highlighted
New Member

I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

I'm not understanding why "gross sales include GST up until August?"  If you were not registered for GST, you should not have been charging GST on your invoices.  In my humble opinion, I would suggest that you strip all of the GST you have collected, and separate the GST from the expenses, and remit the difference.  I suspect that you are likely to be an annual filer for GST so it should look more reasonable.

In order to regularize your invoices, you can forward a copy of your first invoice, showing that you were adding GST to the invoice, and they will happily back-date your registration.

View solution in original post

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New Member

I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

My mistake, you are correct.  I was not even charging GST on my invoices until I got the number.  That clears that up, but leaves a slight confusion of my expenses.  In my spreadsheet the taxes are separated from the expenses only after August.  Do I get to claim any sort of credit for having to pay GST before I got my number or does it all balance out because I wasn't charging it on my invoices either?  I think I may be overthinking this way too much...just want to make sure I do it right
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New Member

I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

The idea is to get yourself in a position where it is easy to prove that you did not improperly charge GST on your invoices or claim ITC's from costs prior to obtaining the tax number.  It's great that you have a spreadsheet to explain the circumstances.
 
You will need to report all of your income on the GST34, so the amount of GST collected in relation to the income may appear low.  The input tax credits may appear low as well in relation to the income. I don't anticipate this being a problem, but you never know.  Do not add GST to any of the income in the sales section of your tax return, as it is reported and remitted on the GST34.

If you are a quarterly filer, you could file Nil returns for the first two quarters of the year, and then report appropriately for the next two quarters, but if you are an annual filer, just report on the year end report.

It sounds like you are in pretty good shape.
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New Member

I acquired a GST number in the middle of the tax year for my business. Now some numbers I enter in my T2125 include GST and some do not

Thank you