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FOR CANADA:
Let's assume I make $100,000 in sales with a 13% HST tax = $113,000 in a year. Also let's assume zero expenses for the year. I pay $13,000 in HST.
Are my corporate income taxes on $100,000? or $113,000?
Is HST treated like an income and expense ($100K is taxed)? Or just like an income ($113K is taxed)?
In principle, GST/HST is value-added tax. The tax on your sales is not a tax on you, but on your customers; you are collecting the tax on behalf of the government. You are holding it in trust for the CRA, same as for your payroll (EI/CPP/etc.) deductions. It is not part of your income.
GST/HST needs to be filed separately.
You also pay the tax on your supplies which is deductible for your GST/HST remittance as an input tax credit (ITC). For certain small businesses, the quick method for GST/HST may be elected and has its own way to calculating remittance, which may be beneficial if your GST/HST-taxable expenses are low.
The short answer to this is that your corporate income for tax purposes is $100,000 as the $13,000 HST is collected on behalf of the government and is forwarded to the government.
If you had any expenses then you would reduce the amount of HST paid and the amount of corporate income tax. For example if you had certain costs of goods sold for $10,000 + HST of 1300 then your HST to remit to to the government would be 13000-1300. Your corporate income would then be 100,000 - 10,000 cost of goods sold.
