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A Complete Guide to GST/HST Returns

GST-HST-Guide

The two main taxes in Canada are the Harmonized Sales Tax (HST) and the Goods and Services Tax (GST), which are applied to the majority of goods and services that are sold in Canada. Businesses of all sizes need to know how to file GST/HST returns to ensure compliance and prevent penalties. This thorough guide will take you through the fundamentals of GST/HST, the filing procedure, and crucial factors to consider when efficiently managing your tax obligations.

What is GST?

The Goods and Services Tax (GST) in Canada is a value-added tax (VAT) that is levied on most supplies of goods and services made in Canada. It’s similar to sales tax in other countries. The GST is currently 5% and is administered by the Canada Revenue Agency (CRA).

The GST applies to most products and services sold in Canada, except for certain exempt items like groceries, medical services, and residential rent. Businesses are responsible for collecting the GST from their customers and remitting it to the CRA.

What is HST?

The Harmonized Sales Tax (HST) is a value-added tax (VAT) that combines the federal Goods and Services Tax (GST) with the provincial sales tax in certain Canadian provinces. It’s a single tax that is collected by businesses and remitted to the government.

The HST is a combination of the 5% GST and the provincial sales tax. The provincial sales tax rate varies by province.

Who Needs to File?

Businesses with taxable revenue

If your business’s total taxable revenue exceeds $30,000 in a single calendar quarter or over four consecutive calendar quarters, you must register for GST/HST.

Businesses importing goods

If you import goods into Canada, you generally need to register for GST/HST, regardless of your revenue.

Non-resident businesses

Non-resident businesses that make taxable supplies in Canada must also register for GST/HST.

Exemptions to GST/HST

  • Most food items, including groceries, are exempt from GST/HST. However, prepared food served in restaurants is generally taxable.
  • Medical and dental services are exempt from GST/HST.
  • Prescribed drugs and medical devices are exempt from GST/HST.
  • Residential rent is exempt from GST/HST.
  • Donations to registered charities are exempt from GST/HST.
  • Some financial services, such as basic banking services, are exempt from GST/HST.
  • Goods and services provided by the government are generally exempt from GST/HST.
  • Goods and services exported outside of Canada are generally exempt from GST/HST.
  • Certain educational services, such as primary and secondary education, are exempt from GST/HST.

Steps Involved in Filing GST/HST

  • Register for GST/HST: If you haven’t already, you’ll need to register for a GST/HST number with the Canada Revenue Agency (CRA). This can be done online or by mail.
  • Collect GST/HST: As you make taxable sales, you’ll collect GST/HST from your customers.
  • Claim input tax credits: You can claim input tax credits for the GST/HST you pay on your business expenses.
  • File your GST/HST return: You’ll need to file a GST/HST return at the end of each reporting period. The frequency of filing depends on your business’s revenue.
  • Pay any net taxes due: If you owe more GST/HST than you’re entitled to claim in input tax credits, you’ll need to pay the difference to the CRA.

Filing Frequency

  • Monthly: Businesses with monthly revenue exceeding $1.5 million.
  • Quarterly: Businesses with quarterly revenue exceeding $30,000 but less than $1.5 million.
  • Annually: Businesses with annual revenue less than $30,000.

Electronic Filing

  • CRA’s My Business Account: Log in to your CRA My Business Account and select the GST/HST section. Follow the instructions to enter your financial information and submit your return.
  • NETFILE or TELEFILE: Use NETFILE-certified software or the TELEFILE phone service to complete your filing online.

Paper Filing

  • Complete Form GST34-2 if you prefer paper filing. Ensure you fill out all relevant sections accurately.
  • Mail the completed form to the address provided by the CRA before the filing deadline.

Seek Professional Assistance

At One Accounting, we offer expert guidance and tailored solutions to help you efficiently manage your financial and tax responsibilities. Our experienced team is dedicated to providing comprehensive support and professional assistance to ensure compliance and optimize your financial outcomes.

Our team of certified accountants brings a wealth of knowledge and experience in handling GST/HST returns, ensuring accurate reporting and timely filing. We handle the preparation and submission of your GST/HST returns, accurately calculating input tax credits and net tax to ensure correct filing and payment. Contact us now for a Free Consultation.

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