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GST/HST Filing Tips for Calgary Businesses

GST-HST

Businesses in Alberta face particular opportunities and challenges in optimizing their tax strategies due to the province’s distinct tax landscape. It can be challenging for small and medium-sized businesses in Calgary to navigate the complicated world of GST/HST.

Businesses in Calgary can increase their financial efficiency, reduce compliance risks, and streamline their tax procedures by adhering to these recommendations and keeping up with the most recent tax laws.

How to File GST/HST for Small Businesses?

    • You must register for a GST/HST account with the Canada Revenue Agency (CRA) if your business earns $30,000 or more in gross revenue over four consecutive quarters.
    • Once registered, you’ll receive a Business Number (BN) for tax filings.
    • GST (applicable in Alberta): 5%
    • HST (in provinces with harmonized tax): Varies from 13% to 15%
    • You can recover the GST/HST paid on eligible business expenses.
    • File monthly, quarterly, or annually as assigned by the CRA.

1. Determine Your Filing Frequency

Choosing the correct GST/HST filing frequency is crucial for Calgary businesses to stay compliant and manage cash flow effectively. The Canada Revenue Agency (CRA) assigns filing frequencies based on your business’s annual taxable revenue:

  • Annual Filing
    • For businesses with taxable revenues of $1.5 million or less.
    • Ideal for small businesses that prefer simpler, less frequent filing.
    • GST/HST payment is due within three months of your fiscal year-end.
  • Quarterly Filing
    • For businesses with taxable revenues between $1.5 million and $6 million.
    • Balances the workload with more regular cash flow management.
    • Filing and payment are due one month after the quarter ends.
  • Monthly Filing
    • For businesses with taxable revenues over $6 million or those preferring frequent payments.
    • Filing and payment are due at the end of the following month.

2. Taxable Goods and Services

Most goods and services provided by Calgary businesses are subject to GST at 5% (since Alberta has no provincial sales tax). Clearly state GST on invoices to avoid confusion with customers. Examples include:

  • Retail sales (clothing, electronics, furniture)
  • Professional services (consulting, accounting, legal advice)
  • Restaurant meals and catering services
  • Vehicle repairs and maintenance

Zero-Rated Goods and Services

These are taxable at 0%, meaning no GST is charged, but you can claim ITCs for expenses. Examples include:
  • Basic groceries (e.g., milk, bread, fresh produce)
  • Prescription drugs
  • International transportation services

3. Claim Input Tax Credits (ITCs)

Claiming Input Tax Credits (ITCs) allows Calgary businesses to recover the GST/HST paid on expenses used for business purposes. Properly managing ITCs can significantly reduce the amount of tax owed. Claim ITCs within four years of the end of the tax year when the expense was incurred. For large businesses, the time limit is two years.

You can claim ITCs for:

  • Office supplies (e.g., paper, ink, stationery)
  • Utilities (e.g., internet, phone, electricity)
  • Business equipment (e.g., computers, machinery)
  • Travel and meals (business-related only)
  • Professional fees (e.g., legal, accounting)

Keep Accurate Records

  • Invoices and receipts showing GST/HST paid
  • Proof of payment (bank statements, credit card slips)
  • Contracts or agreements for larger purchases

Calculate ITCs on Your Return
Subtract the total ITCs from the GST/HST you collected.

  • If GST/HST collected exceeds ITCs, pay the CRA the difference.
  • If ITCs exceed GST/HST collected, request a refund.

4. Keep Accurate Records

Maintain clear and comprehensive financial records for at least six years. Regularly update your records to make the filing process easier. Your records should include:

  • Sales invoices
  • Expense receipts
  • Bank statements
  • Contracts and agreements

5. Avoid Late Filing Penalties

Timely filing and payment of GST/HST are crucial to avoid penalties and interest charges for Calgary businesses. Here’s how to stay compliant and steer clear of late filing penalties:

  • Monthly filers: Returns and payments are due at the end of the following month.
  • Quarterly filers: Returns and payments are due one month after the quarter ends.
  • Annual filers: Returns and payments are due three months after your fiscal year-end.

6. Stay Updated on GST Changes

Tax laws and rates may change. For example, Alberta currently does not impose a provincial sales tax (PST), but staying informed about federal adjustments is essential.

7. Use Accounting Software

Accounting software automatically calculates GST/HST on sales and expenses, reducing manual errors. Key features include:

  • Applying the correct tax rate (e.g., GST at 5% in Alberta).
  • Tracking tax collected on taxable sales.
  • Calculating Input Tax Credits (ITCs) for eligible business expenses.

8. Seek Professional Help

By partnering with One Accounting, Calgary businesses can simplify the process and ensure compliance with the CRA. One Accounting professionals have in-depth knowledge of GST/HST regulations, ensuring your filings are accurate and compliant. One Accounting ensures your returns are filed before deadlines, even during busy periods. If the CRA reviews your filings, One Accounting can guide you through the audit process and handle communications on your behalf.

Here’s the complete guide to GST/ HST Returns

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