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How to get an HST refund when you don’t charge HST

John Paul: Hi there, and welcome to Campanella McDonald’s Tax Tip video, where today we’re going to talk about zero rated HST. So this tends to – we tend to see this with people who are starting a new business. The question, should I register in HST? There is a couple of rules, the $30,000 threshold, are you going to make more than this. This topic is more breached on whether or not you should if you’re under the 30,000.

Fabio: Yeah, so if you think you’re going to be under the $30,000 threshold where it’s mandatory to sign up for HST, you may still want to consider signing up for HST, especially in the case where all your sales are going to be zero rated supplies. Examples of zero rated supplies would be export sales of goods and services, food staples such as like milk, bread, vegetables. There’s a whole list that you can look at up on the CRA’s website. If all your supplies are going to be zero rated supplies, you’re actually charging HST at a rate of 0%. Thereby, by signing up for HST, you can get input tax credits for all of your expenditures net, net. This is going to work out to tax savings for you because you’re going to get a check from the government for all the HST you spent on your business expenditures.

John Paul: Yeah. So some caveats that you will see is that, if you do have all of your income generated from US and you’re getting that check from the government for all the ITCs you spent on in Canada, CRA doesn’t really like that too much. They tend to look at it more with our clients. So you will expect to have more interaction with CRA, but as long as everything’s on the up and up, you should be fine.

Fabio: Yeah. So you might get an HST reviewing your first year because the numbers don’t work out under normal circumstances, but if you have all your ducks lined up, you’re going to be okay.

John Paul: Yeah. So until next time, we’ll see you guys then.

Campanella McDonald LLP is a full-service accounting firm based in Oakville Ontario. The firm’s partners and staff concentrate on helping small businessesindependent professionals, and real estate investors maximize their bottom lines by providing specialized accounting, assurance, tax compliance, tax planning and financial advisory services.

 

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