Change to GST for BC freelancers

Photo by Jorbasa. Some rights reserved.

On April 1, 2013, BC went from HST back to GST. How does this affect freelance editors?

Freelance editors: Here’s what you need to know

Do I need to register for a PST number?

No. There’s no need to apply for a PST registration number because professional services other than legal services are exempt from PST.

What tax do I charge?

From April 1, 2013, editors charge GST only. Use your existing GST/HST number.

Place of supply

The place of supply rules stay the same as before: an editor who lives in BC charges a client the HST or GST rate of the province where the client is located (see the rules about place of supply). So I charge BC clients 5% GST, but when I work for a client in Ontario, I charge 13% HST. As before, when I work for a client outside the country, I charge no tax at all.

GST/HST rates by province (information taken from CRA)

This is how much GST/HST you charge a client in this province.

Province	Before April 1, 2013	After April 1, 2013
Alberta (GST)	5%	5%
British Columbia	12% (HST)	5% (GST)
Manitoba (GST)	5%	5%
New Brunswick (HST)	13%	13%
Newfoundland and Labrador (HST)	13%	13%
Northwest Territories (GST)	5%	5%
Nova Scotia (HST)	15%	15%
Nunavut (GST)	5%	5%
Ontario (HST)	13%	13%
Prince Edward Island	5% (GST)	14% (HST)
Saskatchewan (GST)	5%	5%
Yukon (GST)	5%	5%

Quick method remittance rate

If you use the quick method of GST/HST accounting (this is probably the right method for editors to use, unless they subcontract out a lot of work), your remittance rate is now 3.6% for BC clients. This is the remittance rate for a service provider based in a non-participating province (which BC is now) to a client in a non-participating province. (A “participating” province has HST; a “non-participating” province has GST.) Your remittance rates for income earned from clients in other provinces stays the same (except PEI, which instituted HST this April 1). Don’t forget that this new 3.6% remittance rate for BC clients only applies to your income from April 1 onward.

Quick method remittance rates for work done in BC (information taken from CRA)

This is how much GST/HST an editor in BC remits.

Client is in this province	Rate before April 1, 2013	Rate after April 1, 2013
BC (participation changed)	8.2% (part.)	3.6% (non-part.)
Ontario (participating)	9%	10.5%
Quebec (non-participating)	2.1%	3.6%
Nova Scotia (participating)	10.6%	12%
Prince Edward Island (participation changed)	2.1% (non-part.)	11.3% (part.)
Other participating province	9%	10.5%
Other non-participating province	2.1%	3.6%

Sources for my information

Changes to the Harmonized Sales Tax
BC Government: PST exemptions (see the sidebar “Non-Taxable Sales & Services”)
CRA: List of GST/HST rates by province
CRA: Place of supply rules for services

As always, this is backed up by a few calls to the CRA help line.

Other tax information

See also:

• Income tax for Canadian freelancers: Allowable deductions for freelancers and small business owners
• Income tax for Canadian freelancers: T2125 Declaration of business or professional activities

Janet Mackenzie on running a freelance editing business

The Editor’s Companion, by Janet Mackenzie, has a great chapter on starting a freelance editing business. In eighteen pages, she deals with all the major points:

• Qualities that make a good freelancer
• Running your office and being productive: time management, dealing with clients, stress, professional development, choosing projects
• Business considerations: what a business plan can do for you, insurance, bookkeeping
• Contracts: what needs to go into a contract, and a nice half-page sample contract

What to charge

To calculate how much you need to charge to earn your target income, start with a list of business expenses, the biggest of which is your own labour. As part of the cost of labour, consider the time you will spend on administration, project management, and the cost of employment. Employment costs are vacation, sick time, and pension plan. The author suggests that the “loaded” salary that includes these expenses is 17 to 25 percent more than a person’s base salary. (When you take into account the cost of maintaining a work space, I’ve seen estimates of 40 percent or more as the markup that a contractor needs to charge above an equivalent in-house rate.)

Hourly rate

Mackenzie suggests that an editor who is competent according to the Australian Standards for Editing Practice is worth at least AUD 50 per hour (about CAN 53; this book was written in 2004). She suggests giving a price by the job rather than by the hour, and feels it’s quite appropriate not to reveal your target hourly rate to the client (“If he presses you, say primly that your accountant has advised you not to reveal it”). She mentions in passing that hourly rates are not a good predictor of project cost because working speed varies quite a lot.

Work flow

Mackenzie suggests a three-column table—see below—to track your schedule of projects to come, in progress, and due. I think I’m going to give this format a try. I’ve been marking dates to receive and send projects on Google Calendar, but I find that the display gets too cluttered when I try to show which projects are in progress.

Date May	Due in	Working on	Due out
1	Joe Bloggs copy edit, first round
2	Flash Magazine, July issue, editorial	Bloggs copy edit
3		Bloggs copy edit, Flash editorial	Flash editorial
4		Bloggs copy edit

Because many projects are delayed or sometimes cancelled altogether, Mackenzie recommends overbooking slightly. “Bite off a little more than you can chew, and occasionally chew like hell.”

Reviewed from a library copy of the book.