"Instant Rebate" rather than "Price drop" or "Sale Price" -- Why?

[Don Y]

In the States, sales tax policies (and laws) vary from location to location.

For example, in CT, I had to charge sales tax on my *time* -- and, had to open a bank account solely for the storage of said taxes.

In many places, sales tax is termed "transaction privilege tax" or even "use tax". Often, the law states that failure of the seller to COLLECT that tax does not release the purchaser from the obligation to *pay* it!

E.g., when I purchase equipment "mail-order" (out of state) for my business, I have to track which sellers collected sales tax from me for that purchase (and, in theory, remitted it to the state) and which did not. For those that did not, I have to "out of the goodness of my heart" (:>) remit the equivalent funds in my monthly filing.

This can get complicated as different vendors may collect different subsets of the "total" sales tax *due*. Some will collect the same taxes that I would pay had I walked up to the corner store to make the purchase. Others may only collect the *state* portion of the sales tax. (we have state, county and city sales taxes, here)

Of course, you can pretend you didn't know this and FAIL to remit the taxes due. That, of course, is called fraud and opens up a whole can of legal worms... (an accountant/lawyer defending you would quickly consume more in fees than you could ever "save")

[clare]

That's what I like about the "passthrough" nature of the HST.

If I don't pay tax on the purchace, and I charge tax on the sale, I don't get the offsetting credit for the tax paid - the government gets the same tax as if I paid the tax and took the offset.

Sure makes the book=keeping easy Add up everything I pay out - add up the tax on what I pay out and right that down Add up everything I sell. Add up the tax collected on what I sell. Subtract the tax paid from the tax collected, and pay the government the difference. So in effect, I don't pay taxes on items consumed in the process of running my business - things like ink, paper, fuel for the company truck, my internet connection, etc.

Just need to be sure and carefull that what I claim is all legitimate expense

[Don Y]

I pay (sales) tax on items consumed by the business. But, can then "write that off" as a business expense (in addition to the actual cost of the product consumed).

I *don't* have to pay sales tax on items that I resell -- but, have to collect sales tax(es) on any of those items that I *do* sell.

For this reason, I tend to have clients purchase directly; it saves me the hassle of making the purchase, fronting my money to do so, waiting to be paid by the client -- in addition to the taxes -- and then having to remit these monies to the gummit. I.e., I'm not "marking up" these items at resale so there's no incentive for me to get involved in the purchase.

It also needlessly complicates cashflow; if I purchase a $20K item today, I've committed $20K of *my* funds (even if I'm given "terms" on that purchase) and now have to risk the "float" while waiting for the client's "accountant" to get around to writing me a check for that amount. And, at the same time, having to come up with the extra ~8+% "sales tax" to remit at month's end.

OTOH, if I'm making that same $20K purchase (+ tax) for myself, I can schedule when it best suits *my* cashflow, budgeting and tax planning. E.g., end of the year is always hectic trying to get last minute purchases on the books for inclusion in *this* tax year (so I don't lose a writeoff by letting the purchase slip into *next* year)

[Tekkie®]

[e-mail] posted for all of us...

Are you sure? Gov'ts are not known for this. ;-)

[Tekkie®]

[e-mail] posted for all of us...

I wish the US. would simplify the personal income tax. There used to be a consumer activist/accountant/good guy on the radio that label every tax "reform" act a CPA employment full employment bill... I'll shut up.