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How Should You Deduct Your Membership Dues?

Employee Members

If you are an employee, you will claim your membership dues in the year the dues are paid. In other words, if your dues are paid in December 2017, they will be claimed as an expense for the 2017 tax year.
 

Self-Employed Members

If you are self-employed (i.e. working from home, working as a contractor), you are required to use accrual accounting. This means that your membership dues will be claimed in the year the dues relate to. In other words, if your dues are paid in December 2017 but relate to 2018, they will be claimed as an expense for the 2018 tax year.


Should I Charge GST?

If you are self-employed (i.e. working from home, working as a contractor), the MTAM and M-Group suggest you charge/collect the GST regardless of how much money you plan or expect to make.  We like to the recommend that practitioners collect GST from the beginning for the following three reasons.

  1. Customers expect to pay tax on purchases, so this will likely not effect sales and is a flow through which doesn’t cost the practitioner any money.
  2. This allows you to claim input tax credits (GST you have paid on your expenses) for GST paid to reduce the costs of the GST you need to pay.
  3. This avoids the risk of being a deemed a registrant if your sales increase above $30,000.

 

TAX TIP: keep GST collect separate from the rest of your funds. This will make it easier to pay the GST when it comes due.

 


What Can Self-Employed RMT's Deduct?


If you are self-employed (i.e. working from home, working as a contractor), the following list from CRA applies:



Who Collects the GST: the clinic or me?
 

If you are an Employee: the Clinic (or spa, or organization) will.

 

If you are a Self-Employed Independent Contractor or "IC": since each clinic and IC’s situation is unique, we would advise that each clinic and IC see their tax advisor before making the final decision on how to record GST and structure the set up. 

 

It is important to note that when an IC is working on a split commission type of contract, your commission has nothing to do with the GST.  GST is a tax that is charged to patients based on the price for service.  GST must be wholly submitted to CRA by the IC or the clinic. 

 

Contract scenarios we most commonly see:

 

--Some clinics charge GST to patients on behalf of the IC then pay it to them as it is collected for the IC to claim. It is technically then the GST number of the IC on the receipt to the patient.

 

--Some clinics charge the patient and collect the GST and make the full claim. It is the GST number of the CLINIC on the receipt to the patient in this case. In this case, the IC should invoice the clinic monthly and charge GST to them for their professional Massage Therapy services.  

 

--Some clinics give the full responsibility to the IC to take payments and manage all of the financial intake and receipting. The IC’s GST number is on the receipt in this case.

 

OVERALL it is a good idea for the IC to send an invoice to the clinic and for the clinic to provide a summary receipt to the IC showing a breakdown of the amount they have paid, including whether or not GST was paid to the IC.

 


 

Affinity Program Partner, M Group Chartered Professional Accountants LLP, will be working with the MTAM on tax tips and courses to help our members with their business. Thanks to our key contact, Chad Reimer, 204 992 7206 or chad@mgroup.ca