Well, that’s one less headache…

So after a lot of time spent trying to wrap my head around the intricacies of our tax system, I’ve decided not to go ahead with GST registration.

Basically – and this was confirmed by an acquaintance who’s a tax consultant – it’s just not worth my time. My turnover is low and I don’t have enough expenses to claim. In fact, apart from the odd phone call, I’m really not sure what I could deduct.

I don’t have a space set aside primarily as a home office. I use my computer for some business, but only a few hours a week – and how do you even go about proving what percentage of time that is? And as for “depreciation”…I don’t even want to go there. Unless I go fully freelance (which I dont’ anticipate doing for at least, oh, a decade or so) or make over $60k a year (when I’d be required to register) I’m sticking with having my taxes paid for me.

What I DID learn, was:

  • “If you’re registered, you need to file GST returns regularly. You add up the GST you’ve received, then deduct the GST you’ve paid from this total. If you’ve collected more GST than you’ve paid, the difference is payable to us. If you’ve paid out more in GST than you’ve charged, we’ll refund the difference.”
  • You can account for GST in three ways: the payments basis, the invoice basis or a hybrid method. In the payments method you account for GST in the taxable period in which you make or receive payment. On the invoice basis you generally account for GST in the earlier taxable period in which you: issue or receive an invoice, or– receive or make any payment.
  • You can file tax returns every one, two or six months.
  • A tax invoice isn’t needed for supplies of $50 or less.
  • If you set aside an area of your house principally for business use you may be able to claim GST on part of the costs of running your home.

For anyone who’s interested though, I’d recommend reading the IRD booklets IR365 and IR375.

And before I forget, head over to Canadian Finance to check out the latest Carnival of Personal Finance! My post on paying bills online was included this week 🙂

2 thoughts on “Well, that’s one less headache…

  • Reply The Asian Pear May 19, 2010 at 06:25

    Sounds very similar to Canada’s GST laws too for companies. For us, it’s quarterlies though for limited/incorporated companies. Sole Propietorships are annually.

  • Reply slamdunk May 19, 2010 at 15:59

    Taxes are my frustration these days. We are in the same boat with a partially used home office–not enough elements present to deduct it fully.

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