GST/HST Remittances: Are You Already Late?

If you have a December 31st year end, the due date for making annual GST/HST remittances is April 30, even though proprietorships have until June 15 to file the T1 General Tax and Benefits return. So if you owe GST/HST now, be sure to make a payment immediately to avoid interest charges.

As a small business owner in Canada, you may be required to collect the 5% Goods and Services Tax (GST), at the federal level and/or the Harmonized Sales Tax (HST) depending on where you live. But this is necessary only if you make sales of taxable goods and services in your business, also known as “supplies” for the purposes of this tax, and you’re registered for the GST.  You must register if your gross revenues are over $30,000.

The GST/HST is imposed on every taxable supply made in Canada. In addition, supplies that are made outside Canada but enjoyed in Canada will also be subject to tax when they are imported into Canada. The recipient of the supply is the one who must pay the GST/HST.

Although almost everyone pays GST/HST on taxable supplies, there are some exceptions. Certain organizations and groups, including some governments and Status  Indians, may not have to pay this tax. In some cases, supplies are taxed at a rate of 0% (these are known as zero-rated).

Small suppliers, those with gross revenues under $30,000, need not register and collect the tax (but may elect to). Specifically, a small supplier is defined as a person whose worldwide taxable supplies are equal to or less than $30,000 in either a calendar quarter or over the last four consecutive calendar quarters. In applying this definition, you are required to add together taxable supplies made by all persons with whom you are associated.

Remember: If you are filing your GST returns annually, you’ll need to make quarterly instalments on your GST/HST obligations if the amount you owe for the year is $3000 or more.

There are many rules around your GST/HST compliance obligations. Be sure to cover these with your Tax Services Specialist carefully. Taking a Knowledge Bureau bookkeeping and professional tax course for proprietorships, two of the courses in the Tax Services Specialist program, is also a good opportunity for anyone considering a small business venture.

Owners of a small business can have both: tax-efficient income today, and the potential to substantially enhance their net worth by building tax-efficient equity for tomorrow. They keep the first dollars they earn and so can invest sooner, building wealth more immediately. But remember, filing an audit-proof tax return is a must.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 52 books on family tax preparation and planning.

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