Taxes (Canada): Canadian dispensaries: Reporting your income for tax purposes

Practitioners

In this article: 

Accessing your financial reports
Account activity and balance report summary
Calculating net sales, cost of goods, and net income
Sales tax
Registered to collect GST/HST?
Retroactive tax payment
T4A forms
Frequently asked questions

 

Note: This content is intended for general informational purposes only and should not be construed or relied upon as tax, legal or financial advice, or applicable to your particular situation. You should consult with your own tax advisor regarding your tax obligations. The views expressed in any of these resources do not represent the views and are not affiliated with or endorsed by Fullscript in any way.

 

Accessing your financial reports

To assist in your financial record keeping, reports can be viewed and exported from your account. These reports, available after your first successful payout, record payout history, sales activity, and are used to calculate net income earned through your account.

To access these reports, select Reports from the practitioner menu. 

Navigating to Reports in your dispensary.

 

Account activity and balance report summary

The Account activity and balance report is a running balance of transactions within the selected time period, breaking down information such as net sales, cost of sales, and your net income.

A summary of these required for tax purposes can be accessed quickly from the Account activity and balance report by selecting the desired reporting year from the drop-down menu on the Reports page. These values can be used confidently to fulfill your tax requirements.

Account activity and balance report summary for the 2019 tax year.

Note: This report was updated in 2020 to improve accuracy and general navigation resulting in two versions of this report: historical and current (2020 and later). We did not overwrite previous years to avoid potential discrepancies in customer records. Learn more!

 

Calculating net sales, cost of goods, and net income

Net sales, Cost of Sales, and Net Income are calculated and displayed in the account activity and balance report summary after selecting a tax year (see example above).

The steps and example below will walk you through how to export the report, and understand how these figures are calculated.

 

Step 1: Downloading the account activity and balance report.

To download the account activity and balance report:

1. Select your name or avatar to open the practitioner menu, then click Reports. On mobile devices, select the menu icon (   ), followed by your name or avatar, then tap Reports.
2. Scroll to the Account Activity and Balance Report heading.
3. Select a year.
4. Click Excel to download a formatted .xslx file to your device. Or, select CSV for an unformatted comma-separated values file.

In our example below, we will be looking into the 2019 tax year.

Account activity and balance report summary for the 2019 tax year.

 

Sample Excel (.xlsx) export of the Account activity and balance report.

 

Column title	Description
transaction_number	The shipment ID.
transaction_type	The row's record type. i.e., payout, refund, or shipment.
transaction_status	The record's status. i.e. amounts paid (payouts), shipped (orders), or received (refunds).
order_number	Fullscript order number.
transaction_date	The date the shipment shipped; date the refund was received; date payout was paid.
msrp_total	Total MSRP (manufacturer suggested retail price) in the shipment.
sales_total	Represents the total retail cost, and is calculated as the MSRP total less the patient discount.
patient_discount	The discount amount deducted from the order total, or patient savings.
cogs_total	The fee earned by Fullscript representing product cost and fees associated with administering the transaction. Referred to as the cost of sales or cost of goods sold (COGS).
subtotal	Represents the order's net earnings to be paid before HST and is calculated as sales_total less cogs_total.
hst	HST paid (appended to payout) if the customer provided their business number to collect HST on payouts.
total	Represents net earnings from the transaction and is calculated as sales_total less cogs_total plus hst. Note: This is the 'amount' column in exports for previous years (2019 and earlier).
balance	Running balance of funds available for payout.

 

Step 2: Calculating net sales

Net sales represent the total retail value of orders transacted. For this, we sum up the values in the sales_total column. In the example below, we see a total of $10,356.23.

 

Step 3: Calculating cost of sales

Cost of Sales represents the cost your practice incurred to complete the sale. For this, we sum up the values in the cogs_total column. In this example, we see a total of $7,766.97.

 

Step 4: Calculating net income

Net Income represents the total of the earnings payable to your business by Fullscript in the form of payouts. To calculate Net Income for the year, we deduct the Cost of Sales (Value B) from Net Sales (Value A). In this example, we find a Net Income of $2,589.26.

Sample Account activity and balance report with Net Sales, Cost of Sales, and Net Income calculated.

Sales tax

Fullscript maintains 100% responsibility for the collection and remittance of retail tax in all provinces of Canada (HST/GST/PST/QST).

Additionally, Fullscript pays passthrough tax to our practitioners when provided a GST/HST registration number as the CRA deems the transfer of profit margin to be a separate and taxable event. If you are registered to collect GST/HST, you have a responsibility to provide your registration number to Fullscript and ensure the appropriate taxes are included in your payouts.

In the past, we used the province of a store’s financial address to determine whether GST or HST was applicable, as well as the respective tax rate.

As we are constantly working to improve and maintain tax compliance, we have been advised by the CRA that, as practitioners are providing Fullscript with the service of their patients, the passthrough tax rate should be based on Fullscript’s location.

Therefore, store owners that provide us with their business/registration number will see taxes included in their payouts at a rate of 13% (Ontario HST).

 

Registered to collect GST/HST?

Given that Fullscript sits at the center of transaction administration, we have taken it upon ourselves to help you stay compliant. By providing us with your business number, as shown below, our system will know that you require us to pay taxes on these transfers as if you were invoicing us. Simply remit these proceeds to the CRA through your regular GST/HST filing process.

If you're registered to collect GST/HST, enter your 9-digit business number within Dispensary settings on the Dispensary info page and opt-in to include taxes (13%) on future payouts.

Enter your 9-digit business number within Dispensary Settings on the Dispensary Info page and opt-in to include taxes (13%) on future payouts

Tip! Check out the CRA's website for more information on GST/HST eligibility and how to register.

 

Retroactive tax payment

If payouts were transferred before adding your business no. and you were registered to collect GST/HST at the time payouts were deposited, a retroactive lump-sum payment can be issued to you!

You must provide an invoice that includes your business number (GST/HST registration number), business name (name provided to register for business number), and all payout amounts (with respective date of transaction) and tax amount due for each payout. Please also include the total tax due on the invoice.

	Mary Roberts Clinics Business No.: ##-#######
Date	Payout total	Tax rate	Tax amount
May 15th, 2019	$100.00	13%	$13.00
May 22nd, 2019	$50.00	13%	$6.50
		Total	$16.50

Example invoice for retroactive tax payment. 

 

T4A forms

2020 tax year and later

A T4A will be issued if you receive a minimum of $500 in payouts (before taxes) during the tax year. Your T4A can be downloaded from Reports sometime between late January to early February. 

If you're on track to be eligible for a T4A, select the banner (see below) to review and submit your tax information through the T4A Information page in your account.

T4A Verify your information banner.

 

This information must be accurate and up to date as this is what we'll use to generate your T4A. If you have a business number, please enter the full number, including the Program ID and Reference #. 

Once completed, check the box next to I certify that this information is correct, then Submit. 

The T4A Information page accessible by selecting the 'Verify your information' banner if displayed in your account.

Note: The business relationship between Fullscript and your account does not require us to generate or send any statutory CRA forms if your payouts are under $500 for the tax year. However, the above guide will help you determine your annual earnings with the Account activity and balance report. 

 

2019 tax year and earlier

If you received $500 or more in payouts (before taxes), you may request a T4A for your records.  Please contact support@fullscript.com to request a PDF copy.

Tip! The amount that would appear in box 048 of the T4A - "Fees for services - Honoraires ou autres sommes pour services rendus" is the sum of all payouts for the tax year not including HST payments. This amount can be calculated using the Account activity and balance report from Reports.

 

Frequently asked questions

In this section:

What do I need to share with my tax professional to complete my taxes?
Where can I download a copy of my T4A?
Why is the sales tax paid to practitioners on payouts a different rate than the sales tax paid by patients?
How do I remit my HST proceeds to the CRA?
Do I need to provide Fullscript with a GST/HST number?
Why doesn't the amount on my T4A match the net income amount in the account activity and balance report?

 

 

What do I need to share with my tax professional to complete my taxes?

✔ Account activity & balance report (for the appropriate tax year)

✔ The HST amounts paid by Fullscript (if GST/HST is collected)

✔ T4A (if eligible)

Tip! When registered to collect GST/HST from Fullscript, taxes paid are located at the bottom of individual payouts from the Reports page.

 

Where can I download a copy of my T4A?

We'll issue a T4A if you received a minimum of $500 in payouts (before taxes) during the tax year. Download your T4A from your Reports page once they're available. T4As should be ready late January to early February following the end of the tax year. 

 

Why is the sales tax paid to practitioners on payouts a different rate than the sales tax paid by patients?

One of the main factors in determining sales tax is the address of the purchaser (more specifically: ship to Address). In short, the payout made to the practitioner is a separate transaction between Fullscript and the practitioner that also requires sales tax to be added. However, since this is a transaction from the practitioner to Fullscript, the destination billing address is our Ontario address.

 

How do I remit my HST proceeds to the CRA?

HST amounts paid by Fullscript to your dispensary can be calculated from the Account activity & balance report by downloading the report for the appropriate tax year, filtering for HST transaction types, and adding them together. HST is also displayed under the 'Summary' heading in individual Payout reports if you have provided Fullscript with your GST/HST registration number.

Note: If you are registered to collect GST/HST, you have a responsibility to provide your registration number to Fullscript and ensure the appropriate taxes are included in your payouts.

 

Do I need to provide Fullscript with a GST/HST number?

This is not a requirement to use Fullscript; however, it is the responsibility of the practitioner account holder to ensure they meet the thresholds and requirements needed to register for GST/HST should they choose to.

 

Why doesn't the amount on my T4A match the net income amount in the account activity and balance report?

The T4A amount is the total amount received in payouts during the year (excluding tax), whereas the net income calculated in the account activity and balance report reflects total earnings during the year; including those that have not yet been paid. 

Note: The account activity and balance report (AABR) was designed to report all completed (i.e., shipped) transactions through a dispensary. Earnings are reported when the obligation to complete the order has been satisfied.