There is a big debate between contractors and nobody really knows
I talked to GST guys (now HST)
- so here is as I do it
Job for example - ESTIMATE $ 50 000 CAD,
On end of the job I count all bills - for example material $ 20 000 which include already HST,
considering as refund from customer,
so I DON`T CLAIM HST AS IT WAS PAYED AND REFUNDED
Rest of it is labour and because estimate was $ 50 000,
The labour including HST is $ 30 000
That leave you $ 3 214.29 HST payed by customer to you.
This is your colected HST.
Some contractors count labour and material and put all together and charge HST on TOP.
I think that is dangerous and expensive,
as you double charge HST to customer on material - and you - but for real your customer -bassicaly paying more HST to Goverment
for no reason.
It will be cheaper for customer then to buy material by himself right?
Why pay extra 12% on top of total???????
OR - you can do it other way - count all bills BEFORE TAX
LABOUR AND CHARGE HST ON TOTAL
But - in this case,
you have to claim HST you paid on bills as claim HST colected from customer
one way or another - HST from bils - paid / collected - comes to zero,
so there is really HST on labour only.