GST and PST Choices for Artists — To Register or Not Emerging artists often wrestle with the question of whether or not to register for either or both of these sales taxes. There are times when this is not an option and there are other times when it is an option, but it may be to your advantage to register. For PST (Provincial Sales Tax), itis mot an option if you make taxable sales. For GST (Gods and Services Tax) there is a small business exemption if your total sales in the year are less than $30,000 in which cuse registration is optional, Althe pointin time when your aggregate sales in any twelve month period reach $30,000 you must register for GST, Once you are registered you must charge PST on all sales other than those to resellers (e.g., galleries — you should get their PST number before exempting them from tax) or those that are shipped directly out of province and GST on all sales other than those shipped directly out of Canada, This sounds lke alotof work, but it's not as bad as it sounds and there are some offsetting advantages. Under PST. ifmost of your sales.are through resellers, you will not have to collect PST but you will be able to buy the components {e2., ground or support, ground cover, pigments and painting materials, varnish and framing)* that go directly into the finished product free of PST by giving the supplier your PST number. Overtime this can represent aconsiderable saving. If you make any sales directly to the end buyer, you will have to collect the PST or absorb itin your price. But this should not present a problem since most buyers are accus- tomed to paying this sales tax. Under GST, all sales except those ex- ported directly from Canada are taxable so you would have to advise your customers and galleries of your GST number and collect GST on revenves, This represents funds coming in that you would not re- ceive if you weren't registered for GST. The gallery or business buyer gets to claim back any GST that they have paid so it is neutral to them. However, you will now be able io claim a rebate for all the GST you pay on your business expenses and this. can add up very quickly, When you file your by Robert McMurray G&ST retum (suggest quarterly) you deduct the GST paid from the GST collected and if the balance is @ positive amount you send in a cheque with your return, but if it isanegative amount you file the report and await a refund cheque, Remember that the GST collected is money that you would not have received if you had not registered and you offset the GST paid against this. Generally, if your expenses exceed your revenues You should get a (GST refund for that period which, when added to the GST collected, makes the exercise worthwhile, The main objection to registering for ei- ther tax is the requirement to keep records. If you are already keeping records for filing your income tax retum you need only add three other line items; PST col- lected, GST collected and GST paid_ The two taxes combined come to 14.5% and that is a fair saving if you can get it. There is also an opportunity to apply for a rebale on inventory items that have al- ready been taxed prior to the time of reg- istering. The other side of this benefit is the possibility of paying the sales taxes on any inventory remaining af the time, if ewer, that you may cease being aregistrunt. To register for PST phone 250.347.0036 in Victora or 604.660.4524 in Vancouver. To register for GST phone 604.669.2990, toll free at 1.800.959-5525 of online at www ccrs-adre.gc.ce [*For potters this means most supplies. | Robert AL McMurray, FCA (Fellow, Char- fered Accowntant), APCA (signature member of the Federation af Canadian Artists) is the senior partner inthe tomar McMurray, Roberts, Heming & Wyborm in Surrey, BC, and a patavervantist. We is the immediate Past Prest- der of tie Federanon of Canodian Artists. Ast aad qerints are focus imterents for him ana’ he hay approximately 80 artiste as clients. These include pained, eculprars, writers, meuriciars, ele. (predaminaarly painters, bork well estab. lished cad emerging). For more iaformation: MATE RIT), fax SSA 2EA7 and email , Look for future articles about financial Matters in the next issuc: suggestions about how to deal with requests for donations from charities and how this can have an impact on your income taxcs, plus another article about a recent court decision that defines ‘areasonable anticipanon of profit’ and how that can affect your income taxes, Summer Pottery Workshop with Pat Webber on Salt Spring Island August 6-15, 2003 August 6-9: Forming wheel throwing, handbullding 30am to 3:30pm August 12-15: Glazing and Firing high fire reduction, raku diam te 34pm Total Cost $600 includes clay, glares, firing pournmel lueches provided and) Registration Pat Webber 425 Stewart Road Salt Spring Island VEE 1V6 250 537-8871 jwebberi@saltspring.com For Information July/August 2003