.jpg)
GST/HST Returns in Canada – A Complete Guide for Businesses
Filing GST returns is a
crucial part of compliance for every business registered under the Goods and
Services Tax (GST) system. It ensures that the government receives accurate
information about the taxes collected and paid by businesses, helping maintain
transparency and accountability in the tax structure. In Canada, the GST system
operates as the Goods and Services Tax/Harmonized Sales Tax (GST/HST),
and businesses are required to file periodic returns to the Canada Revenue
Agency (CRA). These returns summarize a business’s transactions, tax
collected on sales, and tax paid on purchases.
This article provides a
complete and simplified overview of GST/HST returns — explaining their purpose,
how they are filed, due dates, electronic filing rules, rebate options, payment
methods, and other essential compliance aspects.
Introduction
to GST/HST Returns
Every year, the Canada
Revenue Agency (CRA) sends a personalized GST/HST return package to registered
businesses. This package helps taxpayers complete their returns easily and
accurately. It usually includes an information sheet showing the reporting periods
and due dates, an access code for filing returns online through GST/HST
NETFILE or by phone using GST/HST TELEFILE, and remittance vouchers
to make payments at financial institutions.
Businesses can also
register for My Business Account, an online portal that allows them to
file returns, view due dates, make electronic payments, and access their
GST/HST information anytime. Once a business begins filing returns
electronically, the CRA may stop sending the paper-based package unless requested.
However, it remains the responsibility of the business to file the return on
time even if no package is received.
Filing
Requirements for Non-Residents
Non-resident businesses
operating in Canada are also required to file GST/HST returns. Such businesses
must complete their returns in Canadian dollars and sign the forms
before submission. Any payment owed should also be made in Canadian dollars. If
payment is made in a foreign currency, the exchange rate applied will be that
of the financial institution processing the payment, which may differ from the
CRA’s official rate. This ensures uniformity and consistency in reporting.
Reporting
Periods and Filing Deadlines
GST/HST returns are due
based on the business’s reporting period. The CRA assigns reporting periods
according to the business’s annual taxable sales or revenue. There are three
types of reporting periods — monthly, quarterly, and annual.
- Monthly and Quarterly Filers:
These businesses must file their GST/HST returns and remit any taxes due within
one month after the end of their reporting period.
- Annual Filers:
Businesses that file annually usually have three months after the
end of their fiscal year to submit their GST/HST return and make the
payment. However, there are some exceptions.
Exceptions for Individual
Business Owners
If you are an individual
with business income for income tax purposes and you file your GST/HST returns
annually, the following special deadlines apply:
- If your fiscal year ends on December
31, your payment is due by April 30.
- You have until June 15 to file
your GST/HST return, even though the payment is due earlier.
Special Deadlines for
Financial Institutions
Registered financial
institutions (other than corporations that are deemed financial institutions
through elections) with an annual reporting period have six months after
their fiscal year-end to file their return and remit any taxes due. Financial
institutions with annual income exceeding $1 million are also required
to file a separate Financial Institution GST/HST Annual Information Return
(Form GST111). This threshold has been increased to $2 million for
fiscal years ending after August 9, 2022.
How to File
GST/HST Returns
Starting January 1,
2024, electronic filing has become mandatory for all GST/HST
registrants, except for selected listed financial institutions and most
charities. The earlier threshold of $1.5 million for mandatory e-filing has
been removed.
Businesses can file their
returns through one of the following electronic methods:
1. My
Business Account: A secure online service provided by the
CRA. Businesses or their representatives can file GST/HST returns directly
without using any access code.
2. GST/HST
NETFILE: Allows online filing using a four-digit access code.
It’s available to most registrants across Canada except those administered by
Revenu Québec.
3. GST/HST
TELEFILE: Enables filing by phone using a touch-tone telephone.
Businesses can call the CRA’s toll-free number (1-800-959-2038) and follow
automated instructions.
4. Electronic
Data Interchange (EDI): Allows returns and payments to be
submitted electronically through participating financial institutions. No
access code is required.
5. Internet
File Transfer: Businesses can file through certified
accounting software approved by the CRA. This method requires an access code.
Benefits of
Electronic Filing
Electronic filing is
faster, safer, and more efficient than paper processing. Businesses benefit
from:
- Instant confirmation of tax
submissions
- Faster refunds and credits
- Reduced chances of data errors
- Secure online data transmission
- Early detection and communication of
discrepancies
The CRA has made it clear
that penalties will apply for not filing electronically when required.
Filing
Rebate Applications
Many businesses are
eligible for GST/HST rebates or refunds. If these rebates relate to a return
that is being filed electronically, the applications must be sent by mail to
the tax centre mentioned on the rebate form by the return’s due date.
Some rebates, however,
can be filed electronically along with the GST/HST return. For instance:
- Form GST66:
Public Service Bodies’ Rebate Application
- Form GST189:
General Application for GST/HST Rebates (for specific reason codes)
- Form GST524:
New Residential Rental Property Rebate Application
- Form GST190:
New Housing Rebate Application for Houses Purchased from a Builder
If you file rebates
electronically, you should not mail the same forms again. Representatives can
also access online filing options using the Represent a Client service.
How to
Remit GST/HST Payments
Businesses can make their
GST/HST payments in three main ways:
1. Electronically
2. At
a financial institution
3. By
mail
Electronic Payments
As of January 1, 2024,
any GST/HST payment or remittance of $10,000 or more must be made
electronically. Businesses can pay through:
- Their financial institution’s online
or telephone banking system
- My Payment
– a direct online payment option on the CRA website
- Pre-authorized debit via My
Business Account, where the CRA withdraws the payment automatically on
a chosen date
If you’re paying more
than $25 million, special arrangements must be made with your bank. Businesses
can also pay smaller amounts at participating financial institutions using Form
RC158 (Remittance Voucher – Payment on Filing). However, those required to
file electronically cannot make payments in person.
Sole
Proprietors and Annual Filers
If you are a sole
proprietor who operates on a calendar year basis, your GST/HST payment is
due by April 30, and your return must be filed by June 15. You
can:
- Use Form GST34-2 or Form
GST62 to file and pay together by April 30; or
- Use Form RC177 (Balance Due
Remittance Voucher) to pay by April 30 and file the return by June 15.
This flexibility helps
small business owners manage cash flow and compliance efficiently.
Filing
Separate Returns for Branches or Divisions
Even though a business
registers as one entity, it can apply to have its branches or divisions file
their own GST/HST returns separately using Form GST10. To qualify:
- Each branch or division must have
distinct records or locations.
- They must maintain separate
accounting records.
- All must follow the same reporting
periods as the head office.
If the head office files
electronically, all branches must also follow the same electronic filing
method.
Using
Rebates or Refunds to Offset Taxes Payable
Businesses may offset the
tax they owe with any eligible rebates or refunds. The rebate amount should be
reported on line 111 of the GST/HST return. If the rebate exceeds the
tax due, the CRA refunds the difference.
When filing
electronically, businesses can adjust for the rebate directly in the return.
For paper filings, rebate forms must be attached to the return before
submission. However, if a business pays through a financial institution, rebate
offsets are not allowed there; such adjustments must be made directly with the
CRA.
Filing Nil
Returns
Even if your business had
no sales, purchases, or taxable activity during a reporting period, you must
still file a nil return. This confirms to the CRA that you had no
activity during the period. Failure to file may result in:
- Delays in future refunds
- “Failure to File” notices
- Possible penalties
Regular compliance keeps
your account in good standing and avoids unnecessary complications.
Temporarily
Stopping GST/HST Filing
Businesses that operate
seasonally or have very little activity during certain periods can request a temporary
stop in filing — known as designated reporting periods. To qualify,
the total GST/HST expected to be collected in those periods should be $1,000
or less, and the business must have no outstanding tax obligations.
To apply, a written
request should be sent to the nearest tax services office mentioning the
specific periods to be designated. Once approved, the business doesn’t have to
file returns for those designated months. However, if conditions change (for
example, more sales occur), the CRA can revoke the approval.
Annual filers or branches
cannot request temporary stops individually unless the entire organization
applies for the same.
Digital
Economy and New Reporting Obligations
From July 1, 2021,
the Canadian government introduced new GST/HST measures for digital economy
businesses, such as online platform operators and foreign digital service
providers. These businesses must register for GST/HST, charge tax on supplies
made in Canada, collect it from customers, and report it through simplified
filing processes.
This step ensures a level
playing field between traditional Canadian businesses and digital platforms
operating internationally.
Importance
of Compliance and Benefits of E-Filing
Electronic filing offers
multiple benefits that go beyond convenience. Businesses experience faster
processing, immediate confirmation of submission, and fewer chances of errors.
It also enhances data security as information is transmitted through encrypted
government networks.
By filing electronically,
businesses can:
- Track returns and payments anytime
through My Business Account
- Receive quicker refunds and credits
- Avoid late fees or penalties for
missing deadlines
- Maintain an easily accessible record
of all filings
Overall, electronic
filing helps streamline tax compliance and reduces administrative burden for
both taxpayers and the government.
Conclusion
GST/HST returns play a
vital role in maintaining tax discipline and transparency in business
operations. Whether you are a large corporation, a small business, or a
self-employed individual, timely and accurate filing ensures smooth financial
functioning and avoids penalties.
The shift toward
mandatory electronic filing reflects the CRA’s vision for a faster,
secure, and environmentally friendly tax system. Businesses should familiarize
themselves with the various online filing tools like My Business Account,
NETFILE, and EDI to stay compliant.
Additionally,
understanding rebate options, due dates, and payment methods helps businesses
manage cash flow and maintain accuracy in tax reporting. By adhering to GST/HST
return rules and deadlines, taxpayers not only comply with the law but also
contribute to building a transparent and efficient tax ecosystem.
Disclaimer: The information provided is for educational and
informational purposes only, based on research and publicly available data. It
should not be considered professional advice and does not create any binding
obligation on any person or entity.
Click here
