In Canada, you need to collect tax if you make MORE than $30,000 in a year. However, what about the first $30,000 while you are under? I already have a tax number, and I will be starting my first contract soon (before this, I was a normal employee), I am wondering if I need to be collecting tax too.
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If you have your HST/GST number, then you are required to collect tax as per normal. The issue comes in if you are making more than $30,000 per quarter, as you must then register and collect on future transactions [Source - CRA Mandatory Registration]. I would double-check with an accountant though as per the possible penalty if you aren't charging taxes yet, but it doesn't sound like it's a concern. Do remember though, that you are allowed to push invoicing to the next year, if it helps you out to stay under the $30,000. As per the CRA's page on voluntarily registering, once you're registered, you MUST charge, unless you have exempt items; check this list of taxable items as well.
See CRA - How to charge GST/HST and CRA - Calculating how much GST/HST to send in
Canadian Luke
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What about income filed under T4A? – Bill Software Engineer Dec 11 '13 at 04:11
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I'll have to check tomorrow at a computer – Canadian Luke Dec 11 '13 at 04:38
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@YongkeBillYu I would check this page on the CRA's website. I don't know the answer to your question though – Canadian Luke Dec 12 '13 at 20:11
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OK, I did extensive research and here is the answer:
You do need to collect tax as long as you have an Activated Tax Number.
What I ended up doing is to Deactivate my Tax Number, which you can do over the phone so it's quite easy. This allow me $30,000 of HST/GST free income, which at that point, THEN I will reactivate my Tax Number and start collecting tax again.
Bill Software Engineer
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