Every company or business that is registered for paying GST/HST in Canada must submit business returns to Canada Revenue Agency (CRA). Tax filing frequency is dependent upon your annual taxable supplies: quarterly filers report 4 times a year while annual filers submit once every year. Mark your calendar because quarterly payments are one month after the end of each fiscal quarter while annual and final returns are 3 months after year-end. Filing after this period will result in penalties and interest.
Filing Methods
CRA provides different options for filing to suit different preferences and levels of comfort with technology. My Business Account is the CRA’s secure online portal and this is the easiest way to make returns. You can also file using certified tax software or the old-fashioned way using paper forms. Electronic filing is speedier and confirms receipt immediately which is a big advantage to small and medium enterprises. If you file using paper forms, you have to wait 2 weeks for processing.
Input Tax Credits and Net Tax Reporting
When preparing your return, you will determine the GST/HST you collected from your customers and your input tax credits (ITCs) for GST/HST eligible business purchases and expenses. The CRA’s questionnaires on Form GST34 walk you through “Total sales and other revenues” and “ITCs claimed” among other fields. The end result is your net tax owing or refundable. Should your net tax be owing, payment must be submitted by the deadline to avoid accruing interest. A refundable balance will be processed automatically and deposited in your account.
Avoiding The Most Common Filing Errors
Errors in reporting will result in delays to refunds or initiate reviews. Common errors includes claiming ITCs without proper documentation, mixing personal and business expenses, or classifying zero-rated and exempt supplies inaccurately. Maintain proper documentation for all purchases and sales and reconcile your bookkeeping at a minimum on a monthly basis. If you find an error after you have filed, you can make an adjustment request by filing Form GST74 (adjustment request) online or by mail.
Preparing for an Audit
Your GST or HST filings can be audited by the CRA within four years of the filing date. In preparation, keep sales invoices, purchase receipts, detailed ledgers, and other relevant documents meticulously organized. Employ digital bookkeeping software for capturing transactions, as well as for reporting and guide compliance. In case the CRA requires documentation, timely and well-organized answers quell most of the audit issues.
