Only Pay GST On Self-Employed Income?

[michael23]

Hello!

I am filing our tax return for 2014 for the first time using TurboTax from our accountant previously doing it for us.

This is my situation: I run a small data consulting company to offer IT support as 'contract work' for other companies. The only company I dealt with in 2014 was a company in BC (I live in QC) and thus have JUST been charging them the GST (5%) on top of the invoice amount, not charging any QST. My company is registered provincially and federally with a GST + QST tax number. I have not made any payments throughout the year of my GST collected to the government, so I know I would have to pay it once filing.

I entered all the income made in TurboTax (before GST) and it seems to have calculated it with GST. What I am wondering though, is does TurboTax know to not charge QST on this amount since I did not enter anywhere that all my invoices were out of province and I never charged QST to my client?

Something I did notice , is that my 'estimated tax return' on the right side did get significantly lower once I entered that income since I did not pay any income tax or GST on it yet.

I just want to make sure I'm not going to end up paying an unnecessary tax (QST) since my invoices were all to out-of-province clients.

Thanks!

Mike 

[Delphision · Accepted solution]

What version are you using?  I did a trial in Home & Business for self-employed income.  It does produce a summary at the end of the section on T2125, that shows that there are no taxes automatically calculated. I am not seeing, apparently, what you are seeing.

[michael23]

I am using Home + Business 2014. I use the T2125 and enter my total income from my business this year (sales). However, on top of this I did collect GST throughout the year. How do I make the GST payment? Is it through TurboTax (pre-calculated in my refund)? Or do I sent a cheque to the gov't?
What is it then TurboTax calculates, is it just the income tax on that sales amount and not the GST that I need to pay somehow?

[Delphision]

Leave the GST off your T1 return entirely.  You will be filing, probably online, with a GST34 remittance form. You can find some information here:
http://www.cra-arc.gc.ca/bsnsss/menu-eng.html
On the left, in the menu , you will see My Business Account and GST Netfile, both of which will be useful to you.  You will also find information on making a payment.  You should have received a payment slip and access code by now, that would allow you to make a payment at the bank, after you file online.
From what I can see in the return I did, Turbotax only calculates income, less expenses and produces taxable income.  Then it begins the non-refundable credits

[michael23]

So, knowing TurboTax (TT) only does income tax/expenses on my business, I need to file this form separately? I did receive in the mail the following forms for the business: "FP-500-V" and a "GST/HST - QST Return" form from Revenu Quebec this week. Are these the forms I need to fill out? Is it explained on TT how to fill these out properly?

[Delphision]

Yes, you need to file those other forms separately.  They have nothing to do with TurboTax.  You can find the information online.

[michael23]

Ok than you for all your support. I will work on filing these forms as well then. I also have question in another post about partnerships and the T2125 form for each partner (total or 50% each of profits, etc.). If you can help with that, it would be much appreciated too. Thanks 🙂

[Delphision]

I have not done a partnership form using the online version.  What happens with the installed version is that all of the income and expenses are reported at full amounts.  The software then uses the partnership percentage to determine net income for each half.  Then the vehicle expense is added for the partner doing the taxes (the other partner may have different vehicle expenses) and business use of home is calculated (again, the partner may have different costs).  The results are then plugged into your return.  It will probably have to be done the same way for the other partner.  I'm not sure what happens with spousal returns.

[skwok85]

I think that the T2125 Business Income section asks for the GST/PST amounts.