accounting

Sales tax for Canadian photographers

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For Canadian professional photographers (and other business owners), the federal government has published a brief GST/HST guide and a sales tax calculator. The calculator is titled “GST/HST calculator” but the results will also show provincial tax.

Current sales tax rates (these may change):

British Columbia: 5% GST and 7% PST

Alberta: 5% GST and 0% PST

Saskatchewan: 5% GST and 6% PST

Manitoba: 5% GST and 8% PST

Ontario: 13% HST

Quebec: 5% GST and 9.975% QST

New Brunswick: 15% HST

Nova Scotia: 15% HST

Prince Edward Island: 15% HST

Newfoundland and Labrador: 15% HST

Yukon: 5% GST and 0% PST

Northwest Territories: 5% GST and 0% PST

Nunavut: 5% GST and 0% PST

In British Columbia, Saskatchewan, Manitoba and Quebec, the provinces which have both GST and a provincial sales tax, each tax is charged on the retail price only (i.e. there’s no tax on the other tax).

 

Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws and privacy laws can change from time to time. Always check with proper government sources for up-to-date information.

 

Invoicing Basics

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A photographer won’t get paid unless they send an invoice to the customer. For some silly reason, most businesses refuse to send out cheques just for the fun of it. After a photo assignment is completed, send an invoice. There’s no grace period required. It’s not necessary to wait a few days or weeks to avoid looking greedy.

Your invoice must contain your contact information, a date, an invoice number and your tax number(s). The invoice should spell out what the photo assignment was. A photo editor may not remember every assignment. The customer’s accounting department won’t know what your invoice is for.

Sometimes the person who hires you is not the person who will receive the invoice. So make sure you know to whom the invoice is sent. Always ask the customer if they require a Purchase Order number or any other reference number included on the invoice.
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Canadian GST / HST tax form

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This article was posted in 2012. Canada Revenue Agency (CRA) has since made changes to the GST/HST filing process. Back in 2012, taxable and non-taxable (zero rated) sales were included together. Starting in 2016, taxable and non-taxable sales have been separated. This means that the GST/HST form mentioned below is out of date. The CRA has not published an updated form because it wants you to file GST/HST only online.

 

Back in 2010, Canada Revenue Agency (CRA) made it mandatory for businesses to file quarterly GST/HST tax returns electronically. As much as electronic filing is fast and easy, the instructions were, and still are, poorly explained. Fortunately the CRA continued to mail a paper copy of the tax form so you could follow the instructions on the paper copy when filing your GST/HST electronically.

About a year ago, the CRA stopped sending the paper copy of the GST/HST tax form. So now, when filing a tax return electronically, you have to remember (or guess) each step of the tax return. For example, you’re asked to enter a dollar amount for “Line 108” – Uh, what the heck was Line 108 again?
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No cheque in the mail

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From time to time, newer professional photographers ask what they should do when a client is late to pay. The answer is easy: remind the customer to pay.

Okay, maybe it’s not quite that simple although it can be.

When a client hasn’t paid within the time period set by the photographer, often the reason is that the client has lost or misplaced the invoice, or they’ve simply forgotten to pay it. (Yes, it would be nice if we could “forget” to pay our bills.)
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Pictures by the numbers

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First basic rule of business: cash in must exceed cash out.

Revenue from assignment – cost of assignment = gross profit

Gross profit – overhead expenses = net profit (before taxes)

Revenue from assignment is what the client pays you, not including taxes.

Cost of assignment is expenses incurred to do the assignment.

Overhead expenses are expenses that have to be paid whether or not you have an assignment. For example: camera gear, computers, software, car, insurances, utilities, cell phone, rent, etc.

Net profit: if there’s any money here, remember that you still have to pay income tax plus all your normal living expenses.
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Work one day a year

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How would you like to work only one day a year? And, it wouldn’t even be a full day because you’d get to leave early at 2:30 pm.

It’s easy. First, get a job as one of Canada’s top CEOs.

From today’s press release by the Canadian Centre for Policy Alternatives (CCPA):

“At this rate of reward, this handful of elite CEOs pocket the equivalent of the average Canadian wage by 2:30 pm on January 3 – the first working day of the year,” says the study’s author and CCPA Research Associate Hugh Mackenzie.

The study, titled Recession-Proof and based on 2009 data, can be downloaded from the CCPA site. The year 2009 was the worst recession year for Canada, (at least, so far).

Photographers take note: an important point from this is that the average Canadian annual income is about $43,000 ($48,100 for men and $32,100 for women). According to Statistics Canada numbers, this average annual income hasn’t really changed much in several years.

The average “artist” earns about $23,500 per year. The average Canadian minimum wage is $19,877. And just to point out, actors and musicians can earn much less.

 

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