Resale pushes your filings to gross, fast
A designer who bills $60,000 in fees and procures $200,000 of furnishings reports over a quarter million in revenue, because the taxable supply is the full resale price, not the markup. That has two immediate filing consequences. First, the $30,000 small-supplier threshold disappears almost the day procurement starts, so HST registration cannot wait for a comfortable moment. Second, the return only tells the truth if cost of goods sold carries complete landed costs; a missing freight bill quietly turns into taxable income. Our Corporate Tax Filing work starts from reconciled project costs, not a shoebox of pro-formas.
The consolation is the input side: HST paid on trade purchases, freight, receiving and warehousing comes back as input tax credits in the period it was paid, provided the paper trail exists and the supplier invoices name the right entity. That last condition trips up studios whose trade accounts still sit in a personal name after incorporation, because a credit claimed on someone else's invoice is the easiest thing for a reviewer to deny.
HST follows the money's character, not its arrival
Design studios collect money in more shapes than most businesses: retainers, procurement deposits, progress draws, final invoices. Each shape has its own HST moment, and mixing them up either remits tax early on money you may have to refund, or late on money the CRA already considers earned.
| Money in | When 13% HST applies |
|---|---|
| Design fee invoice | When invoiced or paid, whichever comes first |
| Prepaid fee retainer | On receipt, because a prepayment is consideration, not security |
| True procurement deposit | Not until it is applied against the sale or forfeited |
| Furnishings resale at delivery | On the full resale price, even pieces sold at cost |
| Freight recharged to the client | Taxable as part of the supply, whatever the carrier charged you |
The deposit row is where studios most often get offside, in both directions. Whether a payment is a true deposit or a prepayment depends on the contract wording, so we read the client agreement before we decide the return.
Year-end cut-off in the middle of a project
A December 31 year-end rarely waits for install day. Pieces paid for but sitting at the receiver are inventory, not an expense. Deposits collected for goods not yet delivered are liabilities, not income. Fee work performed but unbilled is income even without an invoice. Getting each of those wrong swings taxable income by real money, and the swing reverses the following year, which is exactly the pattern that draws review letters. We tie the year-end numbers to the deposit ledger and the receiving reports, so the T2 stands on records rather than recollection.
Drafters and juniors: decide T4 or T4A before the CRA does
Studios flex capacity with contract drafters and take on junior designers as staff, and the line between the two is a facts test, not a preference. A drafter who works your hours, on your licence seats, only for you, looks like an employee no matter what the invoice says; a payroll examination that agrees can assess retroactive CPP, EI and penalties against the studio. We report genuine contractors on T4A slips, run genuine employees through payroll with T4s, and review the borderline cases against the CRA's own factors before anyone else does. If a CRA letter arrives first, our CRA Audit & Review Support handles the response.
Both returns, one desk
The studio's T2 and the owner's T1 are one financial story: salary and dividends drawn, home-studio costs, vehicle use between showrooms and sites, ARIDO dues on the right return. Filing them together, with the HST returns built from the same reconciled ledger, means nothing falls between the two. It also means the fiscal year-end gets chosen on purpose; a studio whose installs cluster in spring is better served by a year-end that does not land mid-project, and that choice is made once, at the start. Solo designers who mostly need answers through the year, not a monthly engagement, often start with CPA Quick Support at $99/month and have filings quoted separately in writing. Either way it begins with a free 15-minute discovery call, in Mississauga or by video.
