Taxation

Applying Provincial Sales Tax (PST)

Applying Provincial Sales Tax is necessary for a number of business transactions. You must register with the Consumer Taxation Branch, Ministry of Provincial Revenue, and collect social service tax (retail sales tax) on your taxable sales and leases if you engage in any of the following activities:

Selling goods at retail.
Leasing goods as a lessor.
Providing legal services.
Selling parking rights within the Vancouver Regional Transit Service Area.
Providing taxable services (e.g. repairs to goods).
Providing telecommunications services.

The Consumer Taxation Branch will issue you a Certificate of Registration and provide information on your responsibilities.

To register, or to obtain additional information, contact your local Government Agent or:

Information Services
Ministry of Provincial Revenue
Consumer Taxation Branch,
Vancouver 8th Floor,
360 West Georgia Street
Vancouver, BC
V6B 6B2 Tel:
(604) 660-4524
Toll free: 1-877-388-4440 from anywhere in Canada
Fax:(604) 660-1104
Web Site: http://www.rev.gov.bc.ca/ctb

For more information:

Do You Need to Register as a Vendor?
Taxable Services
Application for Registration as a Vendor

Business Number (GST)

The Business Number (BN) is a numbering system that identifies you and the various accounts you maintain. You receive a BN, when you open one or more of Canada Revenue Agency's four major business accounts. The four accounts are:

Corporate income tax
Import/export
Payroll deductions
Goods and Services Tax (GST

Business Number Registration Kits can be obtained from Business Windows, located in many Canada Revenue Agency offices in BC.
Tel: 1-800-959-5525

See also:
Business Registration On-line
Employers' Guide Payroll Deductions
Payroll Deductions Tables

Goods and Services Tax (GST)
You must register for GST as an individual, a business or an organization operating in Canada with worldwide annual revenues from taxable supplies of goods and services over $30,000. You must register for GST if you are a taxi or limousine operator.

If your annual GST-taxable sales and revenues are under $30,000, you are not required to register, but may register voluntarily as long as you are carrying on a commercial activity.

When you register for the GST, you will be assigned a Business Number (BN).

For more information, contact:

Canada Revenue Agency Business Window
1166 West Pender St
Vancouver, BC
V6E 3H8
Tel: 1-800-959-5525
Fax: (604) 691-4446
http://www.cra-arc.gc.ca

More information:
General Information for GST Registrants

Business Records

If you are operating a business or have a self-employment income, you must set up an orderly record and accounting system as required under the appropriate laws. We recommend that you contact the nearest Canada Revenue Agency office for relevant forms, information on expense deductions, interpretation bulletins and income tax return forms. We also recommend securing the services of a qualified accountant.

For more information, contact:

Canada Revenue Agency, Tax Services
Vancouver District Office
1166 West Pender St.
Vancouver, BC V6E 3H8
Business Enquiries: 1-800-959-5525
Requests for forms & Publications: 1-800-959-2221

Income Tax

Income Tax is an important consideration for every entrepreneur to understand. The difference between understanding and complying with the Income Tax Act as a small business owner or not could put your business in jeopardy. While the information contained herein is an excellent starting point, we advise that you seek the advice of an accountant and lawyer for a professional perspective.

The Income Tax Act is administered by the Taxation branch of Canada Revenue Agency. If you conduct business as a proprietorship or a partnership, you must report your share of gross and net profits (or losses) for the business' fiscal period on your individual tax return (T1).

For an incorporated company, file a corporation tax return (T2) within six months of the end of the corporation's fiscal period.

Reasonable Expectation of Profit
If your business is operating under a sole proprietorship or a partnership, it is subjected to a test of reasonable expectation of profit (REOP) review. A REOP review involves examining the various factors of your business to determine if there exists a reasonable expectation of profit, and thus the existence of a business, for income tax purposes.

While this is not a complete list, some of the factors that the Canada Revenue Agency has used to evaluate REOP are:

Profit and Loss experience in past years
Significance and growth of gross revenues
Development of the operation to date
Planned or intended course of action
Time spent on the activity in question
Education, background and experience
Extent of activity in relation to that of businesses of a comparable size

If your business is determined to have no REOP, it will be deemed to be not a business for income tax purposes. As such, any expenses and associated losses of the activity will be disallowed. To learn more information, check out the Canada Revenue Agency website.

Expense Deductions

As a rule, you can deduct any reasonable expense you incur to earn business income. The expenses you can deduct include any goods and services tax (GST) you incur on these expenses unless you claim an input tax credit on these expenses. Therefore, enter only the business portion of expenses on the form. Please note that you cannot claim expenses you incur to buy capital property.

Deductions might include:

Advertising
Bad debts
Delivery, freight and express costs
Fuel costs
Insurance
Interest on money borrowed to run your business
Maintenance and repairs
Management and administration fees
Meals and entertainment (50% of the amount you incur, or an amount that is reasonable in the circumstances, whichever is less)
Motor vehicle expenses (including license and registration fees, fuel costs, insurance, interest, maintenance and repairs and leasing costs)
Telephone and utilities
Disability related modifications, devices and equipment
Expenses for disability-specific computer software and hardware attachments
Computer leasing costs
Other leasing costs
Small tools (i.e. less than $200 cost per tool)
Convention expenses (maximum two conventions a year)
Capital cost allowance
Allowance on eligible capital property (e.g. goodwill, franchise)
Business use of home expenses
For more information, please contact the Canada Revenue Agency, Tax Services
Vancouver District Office
1166 West Pender St.
Vancouver, BC V6E 3H8

General Inquiries: 1-800-959-8281
Business, GST Payroll: 1-800-959-5525
Requests for forms: 1-800-959-2221