If you’re a small business owner, you probably dread when your HST return form arrives in the mail from the Canada Revenue Agency. How do you file your HST remittance? What options are there for paying? How do you know if you owe HST or if you’re due for a refund? In the post we explore the process of filing and paying your HST returns.
A Little Bit About HST
HST is a harmonized sales tax. In Ontario, it is made up of the 5% federal GST (goods and services tax) and the 8% PST (provincial sales tax). It is charged by most businesses on the products and services they sell. Businesses that exceed $30,000 in revenue are required to collect HST. When a business registers for an HST number they elect how often they’re going to remit and pay the HST that they collect – the default remittance period is annually but depending on your revenue threshold it can also be quarterly or monthly.
HST is a pass-through expense. When Ontario businesses charge 13% HST on the sale of their products and services, it is not additional revenue – they remit the HST that they collect to the Canada Revenue Agency. Similarly, the HST paid on the products and services required to run the business is not an expense incurred by the business. At the elected remittance period, businesses are required to file their HST return and if they collect more HST than they pay then the pay the difference to the CRA. If they pay more HST than they collect then they will receive a refund.
Calculating How Much HST You Owe or are Owed
Before you can file your HST remittance, you need to make sure that all of your customer invoicing is up to date and all of your expenses are entered. This will make sure that all of the HST that you have collected and paid is included.
If you use QuickBooks, you can generate an HST report by clicking Reports > Sales Tax > Tax Agency Report. From the window that opens, select “Receiver General” from the ‘Tax Agency’ dropdown box and then enter the remittance period in the ‘From’ and ‘To’ fields.
This report contains all of the information you need to complete your HST remittance.
Filing Your HST Return
The CRA will send you an HST return at the end of your remittance period. You can fill in the form that they send you and mail it back to them, or if you have set up a “My Business Account” account then you can also log in and file your return electronically.
You’ll need to enter your total sales during the reporting period, the amount of HST you collected and the HST you paid. You enter the difference between the amounts collected and paid and this determines whether you owe the CRA or the CRA owes you. All of this information is on the Tax Agency Report from QuickBooks.
Paying Your HST Remittance
If you have collected more HST than you paid and you owe the balance to the CRA, you have a few options for paying. You can pay by cheque made payable to the Receiver General. If you pay by cheque you should make sure to indicate somewhere on the cheque that it is your HST payment, include your business number and the reporting period just to make sure that CRA applies the payment to your HST filing when they receive it.
You can also pay electronically. The “My Business Account” will port you to a login for most (but not all) of the major banks and you can make a payment online.
The Importance of Filing on Time
It’s very important to file your HST remittance on time as filing late can cause you to incur penalties and interest charges. But more importantly, filing late might raise a red flag in CRA’s system that might lead them to trigger an audit, which can be a very inconvenient and potentially expensive process.
Ontario businesses that earn more than $30,000 in revenue are required to charge HST on the products and services that they sell. They also pay HST on the products and services they use to operate their businesses, and periodically they are required to remit an HST return and pay the difference or receive a refund. Filing and paying your HST can be done both online or offline, but it is very important to make sure it is done on time to avoid penalties and to not get extra unwanted attention from the CRA.
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Have Your Say
If you have received your HST remittance form and you’re working through the process of filing and remitting payment, we’d love to hear from you. Tell us how you’re finding the process and what best practices work for you. Also, please share this article using the social media share buttons – chances are there are others out there going through the same process!