Taxes

[Michel Hardy-Vallée]

I think we don't have a "Photo Business" forum yet, but maybe one day this could be useful... For now, I'll phrase my question as an Ethics consideration.

At what point did you decide/had to charge taxes on the sales of your photos? Or include your sales into your annual tax forms? I have occasional sales, nothing huge, but for most of them I had to write an invoice for the client's accounting. It somewhat bothers me that there isn't a line for the Federal and Provincial sales taxes.

Up to a point, those picture sales are pocket money for my passion, but I would like one day for them to become a more regular fixture. It might take ten years, or never happen, but there are no excuses not to know the laws and regulations.

I'm in Québec, so obviously I have to deal with two separate tax systems at once unlike many other places in the world. But I'm curious to know what you consider to be the tipping point between fun and revenue.

 

[David William White]

Psst! Michel, fellow Canadian! Keep this to yourself...but an unprofitable business is our last and only tax dodge! And what could be more unprofitable than photography?!? You become exempt from sales tax on all that film & paper, too.

(Apologies to any moderator that takes exception to tax dodges promoted in the 'Ethics' forum!!)

 

[David Brown]

At what point did you decide/had to charge taxes on the sales of your photos?

When I started selling photos as a business (weddings). If you are talking about selling a print to a friend every once in a great while, then that's another matter. But the bottom line is to learn what the tax laws are where you live, and follow them.

 

[MurrayMinchin]

Good idea about a Photo Business forum...you should float it past Sean.

This might get you started on the taxation front;

http://www.canadacouncil.ca/publications_e/links/tr127245443359218750.htm

Murray

 

[eddym]

For the first 6 years of my photo business life, I lived in Georgia (USA), who has a sales tax. I registered as a merchant and charged sales tax on my sales; my purchases, if bought for resale, were tax exempt.
Since 1984, I have lived in Puerto Rico, which did not have a sales tax. I did, of course, report my profits on my income tax returns.
But in 2006, things changed; Puerto Rico passed a 7% Sales and Use tax, and EVERYBODY who did ANY kind of business at all, even street vendors, artisans, prostitutes and drug dealers (if they could catch them) had to at least register with the tax department. However, "small service businesses" like mine are exempt from collecting the tax. But I still have to file a sales tax return every month, whether I owe anything or not.
As a result, our cost of living took a big jump, and our economy has been in a recession for two years.

 

[Craig]

I believe that the CRA defines the cutoff as making more than $30,000 per year from something as the point when you have to collect GST and get a business number and file a seperate business tax form. You've better check with them.

 

[richard ide]

Yes, best to check. When I started in business, CRA told me that I did not have to register if sales were under the $30,000 per year, but if your sales happened to be over that figure, you were liable for the tax even though you did not collect it.

 

[nc5p]

It's any amount here. I already had a business license for consulting work I did so I just reported and paid it under that. I spent more renting space at craft shows than taxes paid. The main reason I quit selling prints was the shows started requiring "judging" in order to get a table. None thought my pictures were any good so that pretty well ended that. The funny thing is that people did buy them, but they aren't art critics!

 

[jd callow]

I believe that the CRA defines the cutoff as making more than $30,000 per year from something as the point when you have to collect GST and get a business number and file a seperate business tax form. You've better check with them.

This is my understanding. I will be going to the Canadian 'Small Business Center' here in vancouver in the next few days or week. I will let you know what the rules are once I return.

 

[phenix]

It somewhat bothers me that there isn't a line for the Federal and Provincial sales taxes.

MHV, there is such a line. Four years ago it was at $15,000Ca sells per year. Above, you'll need to open a tax account and charge taxes to your clients (only for the difference beyond the $15,000). Below, you don't have to. And this line is for both, provincial and federal.

But you should confirm this information with Revenue Canada. If you call them, they will be able to answer for the provincial too, as they are the collectors for both taxes.

 

[MattKing]

Does Quebec have both taxes consolidated? In B.C., there are two taxes, and the rules are different for each.

One thing to consider - there are some advantages to collecting and remitting the taxes. They include:

1) for GST, you can claim offsetting input credits for the GST you spend on supplies;
2) for PST (in BC) you get to keep a small commission for your efforts, and any items that are purchased for resale (like albums or frames or lab produced enlargements or reprints) can be purchased PST exempt;
3) if you are a registrant, it makes you appear more businesslike, which may aid in getting work; and
4) some suppliers will give you trade or wholesale pricing, and permit you to buy items which are only available on a wholesale basis, if you have the tax numbers (although some may require evidence of a business licence or other business presence as well).

The last two factors may be the most important.

By the way, John's point about the small business centre is correct, but the information in Vancouver is likely to be BC specific and may not be accurate for all the issues in Quebec (particularly the provincial ones). There may be a comparable facility in Montreal though.

Matt

 

[eddym]

MHV, there is such a line. Four years ago it was at $15,000Ca sells per year. Above, you'll need to open a tax account and charge taxes to your clients (only for the difference beyond the $15,000). Below, you don't have to. And this line is for both, provincial and federal.

This is interesting. Does that mean that one day you will not be charging sales tax, and the next day the same customer returns and you have to say, "Oops, I just went over $15,000, now you have to pay sales tax"?

 

[PhotoJim]

Psst! Michel, fellow Canadian! Keep this to yourself...but an unprofitable business is our last and only tax dodge! And what could be more unprofitable than photography?!? You become exempt from sales tax on all that film & paper, too.

Just don't be upset if you have an insurance claim on the photographic property denied because you're using the equipment and consumables for business purposes and didn't buy commercial insurance on the property.

My gear is worth too much to insure commercially, unless I am going to make a ton of money off of it, and I don't have the time nor the interest to try to do so. By earning nothing off my photography, my gear is amateur and my homeowner's insurance covers it normally.

To answer the original poster's question, you collect taxes when it makes sense to do so or when the law requires it, whichever comes first. You are required in Canada to collect GST (federal sales tax) when your income from the business exceeds $35,000. The requirement to collect provincial sales tax will vary by province.