A Lawyer provides legal services to a client. In addition, he acts as an AGENT to purchase a legal supply.
Lawyer purchases a minute book as an agent for client $100.00 + HST ($13.00) = $113.00
The lawyer provides a legal service to the client for $200.00.
The lawyer invoices the client
Legal services $200.00 + HST ($26.00) = $226,00
Minute book $100.00 + HST ($13.00) = $113.00
Total $300.00 + HST ($39.00) = $339.00
The lawyer books the following on income tax & HST return:
Sales (total for invoice) $300.00
Expense (legal supply for client) $100.00
NET INCOME $200.00
HST COLLECTED $39.00
HST PAID $13.00
HST OWED $26.00
Therefore, the lawyer’s income & HST nets out to his services.
The client is able to claim the ITC for the legal supply because it is his purchase done by his agent (lawyer).
Is this correct?