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GST & PST Choices for Artists

Artists enjoying increased success often ask if and when to register for either or both of the GST and PST sales taxes. There are career circumstances when this is not an option for visual artists, but when it is an option it may be to your advantage to register.

For PST (Provincial Sales Tax), it is not an option if you make taxable sales. For GST (Goods and Services Tax) there is a small business exemption if your total sales in the year are less than $30,000. In such a case, registration is optional. When, however, an artists' aggregate sales in any twelve month period reach $30,000 or more, s/he must register for GST.

Once GST registered, artists have simple rules to follow about taxing sales. Artists must charge PST on all sales other than:

  • Those to resellers (such as galleries, stores or to an agent). Artists selling to resellers must record the PST number of all buyers tax-exempted goods.

  • Goods shipped directly out of province.

    The GST is charged on every sale within Canada. Whereas this seems like a lot of work, there are some offsetting advantages.

    Under PST rules, if most of an artist's sales are through resellers, artists do not have to collect PST and they are allowed to buy the components of the product free of PST by providing their PST number. This means the ground or support, ground cover, pigments and painting materials, varnish and framing - everything that goes directly into the production of the product is PST free. Over time this can represent a considerable saving.

    Artists, when first registering for a PST or GST number, must advise customers and galleries of their GST number and collect taxes on sales.

    Artists who are GST registered are allowed to claim a GST rebate for all the GST paid on business expenses. This is a significant benefit for artists. When you submit your GST collected to Revenue Canada, your GST return form provides for you to deduct your GST paid from the GST collected. Generally, if expenses exceed revenue, you will get a GST refund for the reporting period.

    The main objection to registering for either tax is the requirement to keep records. If you are already keeping records for filing your income tax return you need only add three other line items; PST collected, GST collected and GST paid. The two taxes combined come to 14.5% and that is a pretty fair saving if you can get it through exemptions.

    There is also an opportunity to apply for a rebate on inventory items that have already been taxed prior to the time of registering. However, artists may have to pay the sales taxes on any inventory in stock when terminating tax registration.

    To register for PST phone 250-387-0656 in Victoria or 604-660-4524 in Vancouver.

    To register for GST phone 604-669-2990, toll free at 1-800-959-5525 or online at www.ccra-adrc.gc.ca

    The preceding information was provided by Chartered Accountant, artist and Federation of Canadian Artists member Robert H. McMurray, F.C.A., A.F.C.A., C.A.. Robert works with artists and income taxes. Contact: 604-576-9121 or email: mcmurray@mrhw.com

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