CPA and blogger Angela Williams brings us another instalment in her series on accounting for food bloggers. Income, expenses, doing your taxes … they can all send shivers down the spine of even the most experienced cook or restaurant reviewer. Angela breaks it down so that bookkeeping for food bloggers doesn’t have to be hard! Today she brings clarity to GST, HST and PST and what these taxes mean for your blogging business.
Depending on where you live in Canada, you may need to register for GST, HST, or PST, collectively known as a value-added tax, or VAT.
- GST — Goods & Services Tax: as a standalone is only applicable to Alberta
- PST — Provincial Sales Tax: requirements vary from province to province (due to a number of differences, we’ll be ignoring PST for the purposes of the analysis)
- HST — Harmonized Sales Tax (a combination of GST and PST and the amount varies)
Income taxes and VAT aren’t the same thing. Income taxes are taxes paid to the government based on what you earn (need a refresher on what counts as income?) Value-added taxes are charged by a business to the end user of a product.
When to Register for GST/PST/HST
Determining whether or not to register for — and charge — GST/PST/HST depends on a number of factors.
Do you make more than $30,000 per year from your blog?
This is the point at which you cease being a “small supplier” and need to register your business (be it a corporation, partnership, or sole proprietorship) for GST/HST/PST. You must also submit your GST/HST application within 30days of ceasing to be a small supplier
What about advertising income?
Admittedly, this is a bit of a grey area, and the Canada Revenue Agency (CRA) website doesn’t have any concrete guidance on the matter.
As bloggers, a significant amount of our income can come from advertising networks, and it’s highly likely this is the income that will put your business over the $30,000 threshold. By hosting ads on your site,
"you are electronically exporting services or intangible property to a non-resident person (defined as the billing address is outside of Canada without a permanent establishment in Canada) who is not a GST/HST registrant, you do NOT charge GST/HST as it is zero rated." (Source GST/HST Technical Information Bulletin B-090)
If your ad network is based within Canada, and your business exceeds the $30,000 threshold, you should discuss charging GST/HST with your ad network.
Right, so what exactly does this mean? By exceeding the $30,000 threshold you are required to register for GST/HST. Any income you earn from an advertising network would be considered GST/HST exempt.
Invoicing as a GST/HST Registrant
Once you’ve registered for GST/HST you're required to start charging GST/HST from that point forward. You’ll receive a business number and GST/HST number from the CRA and are required to include this on all invoices submitted to customers.
As a GST/HST registrant, you’re required to track the GST/HST you've invoiced to customers, and also the GST/HST you've paid to vendors. While using Excel may be sufficient to track your blogging income and expenses prior to registering for GST/HST, you may want to invest in something a bit more robust to assist in the tracking.
There are a variety of options available, from software you can purchase to Cloud accounting. Many such programs provide integration with your accountant’s software, so you can give your accountant or bookkeeper a login and they’ll be able to easily view your transactions without you needing to download and send a file. Programs that store information in the Cloud often offer the convenience of mobile apps, allowing you to track expenses or generate invoices anywhere, any time. If you try to track GST/HST yourself, you’ll realize it's more than worth it to investigate the other options out there.
And, just a reminder, you’re going to want to make sure you’re retaining all of your receipts with those GST/HST numbers on them for six years.
Filing GST/HST Returns
The frequency of filing GST/HST returns depends on your annual revenues. You may be required to file monthly, quarterly, or annually, with any GST/HST payments due at the time of filing. For small businesses with taxable income less than $1,500,000, you are required to file annually.
After you register for GST/HST you’re required to file and remit each reporting period, even if you collected no tax in that period. Yes, even if everything is zero, you still must complete a return.
If your taxable income is greater than $1,500,000 you must file electronically; however, the electronic option is available to all filers. As recommended in my tax tutorial, you can also register your business for the CRA MyAccount to assist with online filing.
When completing a GST/HST return, you need to include the following information (if you’re using accounting software a report in the program may provide this information):
- Total sales and other revenues (this amount excludes GST/HST/PST)
- Input tax credits (ITC) collected
- Input tax credits (ITC) paid
- GST/HST amount due or refund (yup, if you pay more GST/HST than you collected, you can receive a refund)
- You must register for GST/HST if your income is greater than $30,000 in a year
- Income earned through ad networks (but not sponsored posts) may be GST/HST exempt; discuss with your accountant
- Tracking GST/HST charged and paid is key
- You’ll need to file (at minimum) annual returns
Need help filing your GST/HST return, or calculating any of the figures? Contact me and I’ll be happy to help!
- Accounting for Food Bloggers: What Counts as Income?
- Accounting for Food Bloggers: When & What You Should Expense
- Accounting for Food Bloggers: Tracking Income & Expenses
Accounting for Food Bloggers is written by Angela Williams, a CPA CA registered in the province of Alberta. During the day, Angela works for an oil and gas company in Calgary and in the evenings you can find her running the river pathways or relaxing with her two cats, Merlin and Charlie. Angela also writes and manages two blogs, Cowgirl Runs and Accounting for Bloggers. You can find her on social media as well, at Instagram, Twitter here and here, and Facebook here and here.