GST/HST for bookkeepers: registering, reporting periods and due dates

A business that makes taxable supplies in Canada in the course of a commercial activity generally has to register. The main exception is the small supplier: a business whose revenue from worldwide taxable supplies, together with that of its associates, is $30,000 or less in any single calendar quarter and over the last four consecutive calendar quarters.

• Count revenue before expenses, and include zero-rated supplies.
• Leave out supplies of financial services, sales of capital property and goodwill from the sale of a business.
• Public service bodies use $50,000 instead of $30,000; charities and public institutions have their own rules (Guide RC4082).
• Taxi businesses and commercial ride-sharing must register even when they are small suppliers.

The test is two-sided. A client who goes over $30,000 in a single calendar quarter stops being a small supplier at once; they do not wait for the four-quarter total.

If revenue goes over the threshold in one calendar quarter, the business is a registrant from the day of the supply that took it over the threshold, and must collect GST/HST on that very supply. It has 29 days from that day to register.

A small supplier engaged in a commercial activity in Canada may register voluntarily. It then charges and remits GST/HST on its taxable supplies and may claim input tax credits, and it has to stay registered for at least one year before it can ask to cancel.

The CRA assigns a reporting period from the revenue from taxable supplies made in Canada in the preceding fiscal year (zero-rated supplies included, those of associates included). A new registrant is usually assigned an annual period. A business can always choose to file more often (Form GST20).

The period can change during the year. An annual filer whose revenue goes over $1,500,000 in the first fiscal quarter reports quarterly from the second quarter; over $6,000,000, monthly from the next fiscal quarter. RC4022 works through each case with examples.

Electronic filing is required for all registrants for reporting periods that begin on or after January 1, 2024, except selected listed financial institutions and most charities. Filing on paper when electronic filing is required can lead to a penalty.

A return is due for every reporting period, even when there is nothing to remit and no refund to claim. A missing nil return can delay refunds and lead to a failure-to-file penalty.

Net tax for a period is the GST/HST collected or collectible on sales, minus the GST/HST paid or payable on business purchases that qualify as input tax credits (ITCs). A positive result is remitted; a negative one is refunded.

• ITCs are claimed only to the extent purchases are used in commercial activities, and the expense must be reasonable in quality, nature and cost for the business.
• No ITCs for purchases used to make exempt supplies, for personal use, or for memberships in recreation, dining or sporting clubs (unless bought for resale).
• Keep supplier invoices that show the information required to support the ITC, including the supplier's GST/HST number.

The quick method lets an eligible small business remit a set percentage of its GST/HST-included sales instead of tracking ITCs on most purchases. It is open to businesses with a permanent establishment in Canada whose annual worldwide taxable supplies, with those of associates, are no more than $400,000 (GST/HST included) in any four consecutive fiscal quarters of the last five.

RC4022 excludes persons that provide bookkeeping, financial consulting, tax consulting or tax return preparation services, and those providing legal, accounting or actuarial services. A bookkeeping practice files its own GST/HST with the regular method.

An annual filer whose net tax was $3,000 or more for the previous fiscal year, and is $3,000 or more for the current one, pays quarterly instalments, each due within one month after the end of a fiscal quarter. They are usually a quarter of last year's net tax, or a quarter of an estimate for this year if it will be lower (with instalment interest if the estimate falls short).

• Keep sales and purchase invoices and other GST/HST records for six years from the end of the year they relate to. Destroying them earlier needs written approval from the CRA.
• After an audit, the CRA sends a preliminary statement of adjustments; there are 30 days to discuss it before the notice of (re)assessment.
• An objection to a GST/HST (re)assessment is due within 90 days of the date on the notice (Form GST159, or online in the CRA account).