COVID-19 Pandemic - Impact on your 2019 Tax Return and GST Return

Tax Filing Update

Due to the COVID-19 pandemic the following changes have been made to tax filing deadlines:
Income Taxes:
 Instead of an April 30, 2020 filing deadline for the 2019 income taxes, Canadians will have until June 1, 2020 to submit their income tax return to CRA. 

Business Taxes: The new deadline will be July 31, 2020 to pay any corporate taxes or make any scheduled installment payments that would otherwise be due.

Contact your tax professional for details that apply to your specific situation. 


GST Return FAQ

Canada Revenue Agency has created a handy FAQ to answer a variety of questions regarding your GST return. Please visit GST Tax Deferral FAQ to learn more.


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:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html

Members can also refer to MTAM's Income Tax Tips Handbook for more information to help make the most of your income tax deductions. Login to the member portal and visit Business Tips & Practice Advice to access the most current edition of the handbook.



How Should You Deduct Your Membership Dues?

Employees
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 2020, they will be claimed as an expense for the 2020 tax year.

 

Self-Employed
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 2019 but relate to 2020, they will be claimed as an expense for the 2020 tax year.


Should I Charge GST?

If you are self-employed (i.e. working from home, working as a contractor), the we suggest you charge/collect the GST regardless of how much money you plan or expect to make. We
like to 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. This is very beneficial to self-employed individual during their business start-up years when there are generally large expenses.

  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.


Who Collects the GST: the clinic or me?

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

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/remit. The IC's GST number should be on the receipt to the patient.

--Some clinics charge the patient and collect the GST and make the full claim. The CLINIC's GST number is on the receipt to the patient in this case. The IC should invoice the clinic monthly and charge GST to the clinic 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 Partners, FBC Canada and M Group Chartered Professional Accountants LLP, will be working with the MTAM on tax tips and courses to help our members with their business. 



Getting Ready for Tax Time & Tax Tips for RMT's 

MTAM Members can access a recording of this event by logging into the Member Portal and visting the Business Tips & Practice Advice page.