Client moved consulting (PE) location to BC from Alberta but has an Alberta Corporation. Income split is as follows:
AB consultations $40K — BC/other locations: $5K
AB sales (gross) $100K — BC/other locations sales (gross) $50K
AB - sale of property $350K (one-time event, sale of old biz premises)
All salaries are paid in BC …total of $100K
Consultations are all done remotely from BC to AB clients; all sales are prepped in BC and shipped to AB (there are non-material consulting and sales to other locations, mostly US).
How to report the income split for AB/BC? The property sale netted a gain of $100K…
I can’t find any guidance!
I believe the rule is to report based on where the provider’s head office is located - sounds like BC, from your description. However, if the company has an office or agents or employees in another province, you need to split the income based on some logical formula (i.e. revenue or employee hours or whatever). ITA doesn’t give a specific method, but the taxpayer needs to apply their method consistently, and should be able to explain it to CRA if asked. Also, if you provide online/digital tools that clients/customers can use wherever they are, GST/HST applies based on where the client is.
@nezzer More or less how I’ve dealt with it for other clients…the one-off sale of the property is a bit of a puzzle and I’m tempted to ignore it as it isn’t really “income” in the ordinary sense…and continue to split the tax based on the regular basis. Each province still gets something…