HST Filing in Canada
Canada’s harmonized sales tax (HST) is a combination of provincial sales tax(PST) and the federal goods and services tax (GST). It’s primarily a consumption tax that consumers and businesses have to pay at the point of sale. Tax proceeds are collected by the vendor by adding the harmonized sales tax price to that of the services or goods. These are then remitted to the provincial government.
The GST on Canadian goods and services has been 5% since January 1, 1991. It replaced the 13.5% hidden Manufacturer’s Sales Tax. Its goal was to streamline and improve Canada’s overall tax system, specifically the one imposed upon the export business. However, Canada’s western provinces – Manitoba, Saskatchewan, Alberta and British Columbia – did not sign on to combine the sales taxes with the GST; collectively known as the HST. Also, Alberta, the Northwest Territories, Yukon and Nunavut do not have any provincial sales tax, which means only GST is charged. This leads to confusion regarding PST/HST rates as the prices of goods and services differ by province. Also, many goods and services are exempt which can cause trouble for businesses when invoicing.
If your organization offers taxable goods or services in Canada while generating revenue of more than $30,000, it’s imperative that you file HST returns. Virtuous Bookkeeping helps you meet theCanada Revenue Agency (CRA) guidelines suitable for your industry and avoid penalties for late or missed filings. We provide HST filing assistance to both Canadian residents and non-residents alike. Our experts know that small businesses have to register for HST, irrespective of their revenue. This is why our primary aim is to ensure your business meets CRA guidelines to keep you from paying penalties because of late or missed filings.
When Should Your Business File Its GST/HST Return?
First, find out when your business’s return is due. Typically, the CRA assumes that businesses will file annually, although largerones can choose to file more regularly. Once you register your GST or HST number, the CRA will send a personalized return form which will include the date by which the return needs to be filed.
If you are the sole proprietor, it’s likely that the deadline for your GST/HST filing will be the same as that for your personal income tax. Typically, companies have the same fiscal year-end for both GST/HST and income tax purposes. However, if any company wishes to follow a different GST/HST fiscal year-end, they need to get consent from the CRA.
Our advisors have the expertise and skills to help your business save as much as it can on HST. Also, many corporations don’t charge HST on certain goods; these are commonly referred to as zero-rated items and need to be excluded from your charge. Our experts can help you identify such zero-rated items along with those that are taxable or exempt. This allows you to save more on your overall HST charges.
The Best Way to File for GST/HST Return
Choose a Suitable Method
Companies need to figure out the most suitable accounting method for their situation. Many businesses choose the ‘standard method’, where they only need to pay the difference between the GST/HST and the input tax credits they have collected. The CRA also offers the simplified method and the quick method.
The simplified method consists of a single formula that helps companies file a GST/HST return and claim. All businesses need to do is add their business expenses and multiply them by a fixed amount based on theirtax rate. Then, they need to add additional amounts that are applicable to their situation. This helps reduce the compliance effort any business may have to put in to record their HST or GST separately.
In the quick method, companies calculate their HST or GST by multiplying the tax collected through sales to clients using a remittance rate. This is an easier and much faster way to calculate the exact amount you owe.
Accurately Fill Out a Return Form
Once you’ve chosen an accounting method, you need to properly fill out the paperwork the CRA mails to you. This generally includes two parts:
• A copy to keep where you can work through calculations
• A tax return form with all the relevant information for the CRA
On the CRA copy, businesses generally need to enter this information:
• Any debits or credits
• Total amount of tax the company has collected
• Total sales and any other revenues
• Total tax your business has paid
Once this is complete, it will be easier to calculate how much you need to pay the CRA or if you’re owed a refund.
Finish and File the Return
The last step is to transfer the applicable figures from the copy to the actual form. Once complete, you’ll be ready to finish and file your return by mailing it to the GST/HST address mentioned in the form. If you prefer to file electronically, you will find a four-digitaccess code on the form for GST/HST NETFILE.
At Virtuous Bookkeeping, we specialize in helping Canadian residents and non-residents with their tax needs. We help businesses determine whether they need a GST/HST registration and how it will benefit them. We can also help with the registration process, from start to finish. Contact us for more information.