Rule 7.1-2 of the lawyers' Rules of Professional Conduct and
subrule 8.01(2) of the Paralegal Rules of Conduct provide
that lawyers and paralegals shall promptly meet financial obligations incurred
in the course of practice. This includes financial obligations that have been
undertaken on behalf of clients, as well as the professional's own financial
obligations. To meet your responsibilities to collect and remit HST to the
Canada Revenue Agency (CRA), you must keep track of the total HST receivable for
services provided on your fee billings each month. This can be recorded in your
fees book or you may keep a chronological file of all your fee billings.
The HST is recorded in your books and records as a debit to
HST Receivable (from clients) and as a credit to HST Payable (to the
government). HST payable to the government is offset by HST paid by you or your
firm on the purchase of goods or services used in the firm.
Provided that you have adequate funds in trust for the
client, once you have billed a client for fees, disbursements, and the
applicable HST, you must transfer funds from your trust account to your general
account for payment of your invoice as soon as it is practical to do so. It is
not appropriate to transfer payment for your fees and disbursements only,
leaving the HST to be held in the trust account, because HST collectible is not
considered client trust money.
Note that once you have billed a client for services that
are subject to the HST, regardless of whether the client has paid for those
services, the HST must be remitted per the CRA's schedule. Your books and
records should be accurate and current at all times as they may be subject to a
HST audit. More information on the HST is available from the CRA website.
Revenue Agency, Goods and services tax/harmonized sales tax (GST/HST)
TheBookkeeping Guide for Lawyers
The Bookkeeping Guide for Paralegals
Sales Tax (HST)
and the Harmonized Sales Tax (HST)
Transaction Levies and the Harmonized Sales Tax (HST)
the Harmonized Sales Tax (HST) on a Statement of Account
the Harmonized Sales Tax (HST) From Trust