Adena asked:

I am an independent contractor massage therapist. The clinic I work for pays me 60% and keeps 40% of the client fees. They collect all the money and give me a cheque at the end of the month. Do I pay GST on this? Should I charge them GST? If I pay GST out of the monthly cheque I receive, am losing money right? What is the best way to approach this? Thank you.

Philippe Brideau answered:

As a GST/HST registrant, the clinic will charge GST/HST on the amount payable for massage therapy services it provides to its clients. The clinic would be responsible for filing GST/HST returns in which it would report the GST/HST collected or collectible (i.e. due) from its clients. On these returns, it would also be entitled to claim input tax credits for the GST/HST paid or payable on any costs incurred in the course of its commercial activities, and would remit the difference to the Receiver General.

A person whose annual sales do not exceed $30,000 is considered a small supplier for GST/HST purposes and is not required to register for GST/HST in the same manner (although the person may do so voluntarily). To clarify in regard to the situation outlined in your query, where the massage therapist is a small supplier and not registered for GST/HST, he or she would not have to charge the clinic GST/HST for his/her massage therapy services.

If the massage therapist decides to register for GST/HST, he or she would be required to charge the clinic GST/HST on the amount paid for the massage therapist's services (i.e., GST/HST billed to the clinic equal to 60% of the amount the clinic charges its clients). The clinic, in turn, would be entitled to claim an input tax credit for the GST/HST paid, or payable, for the massage therapist's services. Also, as a GST/HST registrant the massage therapist would be required to file GST/HST returns in which the GST/HST collected or collectible from the clinic would be reported. The therapist would however also be entitled to claim input tax credits for any GST/HST paid or payable on any costs incurred in the course of these commercial activities, and would remit the difference between the GST/HST collected or collectible and the input tax credits claimed to the Receiver General.

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