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On regular business costs

Solar generation in some respects is just another business

by : Nov 1, 2015

When a property owner enters into a contract with Ontario Power Generation to supply photoelectric power, the owner is deemed to be in business with OPG. As a result, the owner collects taxes payable on the power generated, and later remits that tax to the central authority. It's all part of the regular account keeping activities of a business, in this case with one source of income and minimal expenses.

Tax is payable on a regular basis as determined by Revenue Canada. This might be monthly, quarterly or yearly. The process is simple enough: take a reading from the meter at the end of the reporting period, calculate the number of kilowatt hours generated in the reporting period, the value of the power generated at the rate payable, and then the HST rate on top of that. The only cost is in the inconvenience of having someone read the meter at the proper time, perform the calculation, make the report and remit the balance due.

With the advent of reporting through the Internet, the reporting is easy and minimal through Netfile. The server end is becoming more reliable as we learn from mistakes, so half an hour per reporting period is enough to make the calculation and report the balance due. The situation becomes more complex where the solar generation is only one part of a larger operation where it is more difficult to assess the total income; however this kind of situation normally justifies computerized bookkeeping, which can deliver a report very quickly if the system is kept up to date.

There was recently a road bump in the process of remitting the balance to the receiver general. The banks suddenly changed over from one type of debit card ("Interac") to a new type ("Visa Debit") which we were assured would be more secure. One result of the change was to remove a payment option from a remitter's arsenal of tools. Under the old system it was possible to make a payment directly to Revenue Canada through a personal account using a debit card under the "My Payment" option. The new card does not permit that. If my understanding is correct, this was a deliberate choice by Revenue Canada, and may stem from different rules of liability connected with the new

However the method of remitting using a cheque is still available, and you can make a payment in cash through your own bank branch using the correct remittance slip, but perhaps even more convenient is the option to set up a pre-authorized debit, which allows CRA to take the balance due directly from your bank account. This payment method is certainly the most convenient and reliable, and is probably the method preferred by CRA and the banking system since it means that they don't have to process a physical cheque.

In fairness to the banks we can also mention that if you have a business account with the bank then more options for paying CRA directly are available as part of the business package. However it is a fair question to ask whether running the "business" of generating solar power justifies the extra bank fees charged in a business context. The operation of such a minimal business does not generate account activity or imply risk for the bank in the way other businesses do. The requirements are quite different and do not warrant business type fees.

Reporting and remitting of taxes, and responding to different methods of doing so as the rules change, are one of the costs of running a solar power generation business.