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Charging GST and PST

Expert: John R Mott

Kim asked:

I am in the process of starting an interior decorating business and am quoting my first job. I need to know how the PST and GST works. I have to use some sub-contractors to do the work for me. They will charge me GST but because this is my first job and the sale will not be over the $30,000 mark I will not charge my client.

Do I have to pay the contractor GST? I am also going to purchase some blinds and they have someone to install them. I heard I am not supposed to be charged any PST. Is this correct? As a decorator I need to know the rules when using outside contractors and suppliers who will purchase the materials themselves and do the installation. Please help me with my confusion? I want to be on the up and up right from the start.

John R Mott answered:

Yes, you must pay GST on goods and services, whether or not you are registered.

When you register, you must begin to collect the GST from your customers; but you are also then entitled to a refund of any GST paid to your suppliers and subcontractors.

Many small business owners register voluntarily (i.e. before annual sales reach $30,000) in order to enjoy this feature. In regards to PST, the rules can be a bit tricky. But generally for materials that you acquire and install for a customer, you pay the PST; and you do not collect PST from your customer.

You may find it useful to read a pertinent tax bulletin, such as this one published for Ontario taxpayers:

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at:

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