Income tax SALES don't equal HST SALES

Tax Topics
1

e.g. Used piece of equipment sold for $5,000.00 & 13% HST was charged.
Total of $5,650.00. Book value of equip was $7,000.00 (terminal loss: $2,000.00)

$5,000.00 equipment sale goes into line 101
$650.00 HST collected goes into line 105

However, now HST sales will be a higher amount than sales for income tax purposes.

Is there an issue with this or just a normal occurrence when certain transactions like this occur?

2

The CRA often does a check of T2 income to line 101 on the GST\HST return. I do not know for certain if they check to see if there has been a sale of assets on the T2.

If they do question the variance, they will either call you or send a letter asking for an explanation of the difference. A variance due to a sale of assets is not likely to lead to an audit.

In my experience, I’ve never gotten asked to explain a variance when Line 101 on the GST\HST return is > T2 reported income.

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3

This is normally a question which should be highlighted by the bookkeeper to the year-end Accountant of the business/corporation (Gain/Loss on sale of assets, and related taxation, who will have a working paper on GST/HST at YE).

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