Hello,
Should a freelancer charge sales tax if he’s receiving T4A more than 30k per year?
Yes, and he should be filing HST before he gets the T4A. As soon as you are over $30,000 in the year or in 12 consecutive months, you need to charge and file HST. It is not a matter of should but rather it is a MUST.
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Even if he is freelancer in the company? He isn’t invoicing them
LOL. There is no such thing as “a freelancer in a company”. One is either an employee or self-employed, regardless of billing methodology.
Sounds to me like someone is, at law probably “an employee” and “the company” doesn’t want to pay for CPP and EI, so the person has been called “a freelancer in a company”.
Nonethless, as @obhorst said…you have self-employed income > GST you MUST register, and if the company paying you wants to be able to claim its Input Tax Credits you MUST issue it invoices.
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And if CRA finds that you should have been charging GST/HST and you haven’t been doing so, you could end up earning 13% less than you thought (if you are in Ontario). You are also entitled to claim input tax credits, but CRA won’t care if you haven’t been doing that. You will need to remit 13% of income over $30,000.
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I agree with @obhorst.
Also another thing to consider is that HST is not included on T4A slips, in fact the amounts reported on T4As box 48 are the net income. If a client were to be considered as a true freelancer, they’d provide us a spreadsheet, detailing a full breakdown of their gross income, HST, and the net.
I somewhat agree with @SmallBizGuy. It all depends on the employment contract. However if you’re unsure whether you are an employee or a self-employed contactor, you can send out a request for a CPP/EI ruling (form CPT1) and mail it to the CRA.
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I’ll add a cautionary note to this: quite a few “employers” cheat on CPP/EI and tell their people they are “subcontractors” and absolutely HATE it when it gets referred to CRA for a Determination. Generally people I’ve had in this position do it when they suddenly find out (usually on termination) they’re entitled to neither EI nor the protection of various Employment Standards statutes (think severance/vacations/General Holiday pay)…and THEN they file to CRA.
CRA will generally oblige, and, if the person is determined to be an employee, will charge the employer for undeducted and unremitted CPP and EI - both portions - and penalties. They will also assess for any other 'ees in the same “classification”. If an 'ee is still with the payor, the payor can recover the 'ee portion of the premiums. If not…tough.
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But he gets T4A
What should he do for year 2023? He already exceeded 30k
Your guy may or maynot need to register yet. Read the chart in the enclosed link. Once you determine when the 30K threshold was crossed you can figure out when he needs to register. So for example if he exceeded the 30K anytime after September 2023 then he ceases to be a small supplier January 31, 2024 and must register as of February 1, 2024
Should Uber income be added to his revenue from other company?
All of his business income needs to be included on the GST/HST reporting. He can only have one HST account unless his business is incorporated.
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If this is in reference to the “employee” or “contractor” issue…it doesn’t make any difference. The payor can choose to class the person as a “contractor” and provide a T4A.
But, if the recipient decides to challenge that treatment (usually because they have no expenses, so it make no “tax difference”, but MAY get them severance and/or EI) then CRA will be happy to perform a Determination.
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Umm… this could really throw a wrench into the works.
Since July of 2017 UBER drivers and other commercial ride sharing services are required to register for and collect GST/HST regardless of their level of sales. There is no 30,000 revenue threshold.
If your client is a self employed UBER driver who is already registered for GST/HST (mandatory) and he also provides freelance work to other entities than he MUST collect GST/HST on every dollar of self employed earnings regardless of whether he is over or under 30,000 in annual revenue. If he is registered for GST/HST he must collect tax on ALL of his commercial activities. He can’t choose to be a GST/HST registrant for some of his businesses but not others.
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