Who does this apply to?
This applies to the Canadian business owners, corporate and self-employed, who want to understand what the HST filing periods and the associated deadlines are.
What do I do first?
Now that you’ve determined that you have to register for HST, you’ll need to actually register. If you have a corporation, this will involve opening a HST account. If you’re not incorporated, you’ll need to apply for a business number first, and then open a HST account. This can be done by phoning the CRA, sending in a request for a business number, or through Business Registration Online.
There’s a lot of options. Where do I start?
The first thing to do is align your HST fiscal-year end with your corporate year end. By default, it will be December 31. Off calendar returns make accountants cry.
Next you’ll want to choose a reporting period, which can be Annual, Quarterly, or Monthly. Above 1.5M in revenue, you can only choose quarterly or monthly, and above 6M in revenue, monthly.
Annual returns are due 3 months after the HST fiscal year end for corporations, Quarterly and monthly are due 1 month after the period. The balance is due with the return. If you’re an annual sole-proprietor, you return is due to be filed by June 15th, but you still have to pay by April 30th. Yes, you get two tax bills on the same day. I feel your pain.
So, what filing frequency do I pick?
That comes down to how organized are you, and how you want your cash to flow. With regular bookkeeping, which I highly recommend, the administrative burden of filing quarterly is lessened and you can more closely match your cashflows. If you can’t even, and you want to file annually, you’ll need to set aside cash for the inevitable tax bill, and likely have to make quarterly installments. Again, regular bookkeeping and timely accounting will help you manage that. 9% interest, as of November 2, 2023, is a pretty hefty rate to pay on deficient installments or late payments.
If you want a recommendation, I suggest Quarterly, and that is what I suggest to my clients as well.
Ok, now I can claim the HST paid on all those start up costs?
It depends. You cannot claim HST paid on expenses before you were registered. You can backdate your registration 30 days or to date of incorporation if you knew that you were going to be providing taxable supplies, zero-rated supplies. But if you paid the HST after you were registered, then yes.
I’m registered. Last steps?
Set up your accounting software (or your accountant will) to track the HST collected and paid and start preparing for your first HST return. I use Xero with my clients, which has an amazing setup for Canadian Sales Tax, and in my 15 years of experience is certainly the easiest to started with.
Standard Disclaimer: This is intended to be a guide and not binding tax advice. If you need that, call me.