People in Canada debated publicly when the federal government introduced a GST (Goods and Service Tax). Today, GST has become a part of our business landscape, many organizations, and small businesses; still, they struggle to comprehend the requirements to collect and remit GST to the government. Many provinces in Canada have adopted HST (Harmonized Sales Tax), where the provincial sales tax is harmonized with the GST. When you file HST return in Ontario, you need to keep the following five things in your mind:
- Meaning of Taxable, Zero-Rated, or Exempt: These tell you how GST/HST tax is applied to certain goods or services. CRA (Canada Revenue Agency) classifies such items as taxable, zero-rated, or exempt. The meaning of taxable is that goods and services are subject to the GST/HST of the province where they are being supplied. Zero-rated refers to that the business cannot impose GST/HST on basic grocery and health-related items, such as milk/bread and pharmaceuticals/hearing aids, correspondingly, over and above export supplies or services. Exempt refers to a small & specific group of services to which the tax does not apply, including childcare, most medical services, educational costs, to name a few. To know what is taxable, zero-rated, or exempt, you should consult the CRA or an accounting firm.
- GST/HST Return: Businesses have to amass the GST/HST from their customers and send it back to the federal government by contacting the CRA. It is achieved through a document, GST/HST Return. Usually, when a business registers for GST/HST, it is given a reporting period by the CRA. CRA will mail you a personalized GST/HST Return for Registrants at the apposite time.
- The Reporting Period: You may have a question in your mind: How often does a business remit? The oftenness of remittance is contingent on the duration of its reporting period. CRA dictates the reporting period built on the business’s annual taxable supplies. The majority of business owners are required to report every quarter, and the large businesses with over $6 million in annual taxable supplied should report monthly. Smaller businesses under $1,500,000 in annual taxable generally give an annual filing frequency; however, they can choose to file quarterly or monthly. The novel GST/HST registrants with annual taxable supplies under $1,500,000 are automatically assigned an annual reporting period unless they elect to file an HST return in Ontario more frequently. It would be best if you comprehend a few key tips when it comes to reporting GST/HST:
- Businesses should remit on the reporting period even if they collected no tax during such period, for example, when the remittance is zero.
- You always have the option to increase the frequency of remittance, which may be desirable if you are anticipating refunds.
- You can also choose to file electronically, although the registrants with a threshold amount greater than $1.5 million have to file their GST/HST returns by electronic means.
- Input Tax Credits (ITCs): You may often hear businesses talking about their ITCs, and it is the key part to calculate your GST/HST. ITCs mean the GST/HST that a business pays against its legalize business expenses, and it is the contribution to the enterprise. Every business has to pay GST/HST for its own expenses and then collect GST/HST on the goods or services it provides. Do not disremember that not all GST/HST expenses succeed as ITCs, since items like club memberships encompassing business dinners do not qualify.
- Electronic Filing: The CRA needs many companies to file their GST/HST payments electronically nowadays. In rare cases, CRA may require all and sundry to file electronically, such as business with greater than $1.5 million in taxable supplies excluding charities or all registrants required to capture ITCs for the provincial portion of the HST on certain inputs in British Columbia or Ontario.
What Can You Do to File Your Return If You Are Having Any Challenges?
Suppose you are having any challenges while filing your HST return. In that case, you can consult an accounting firm known for providing valuable advice to business owners like you through their tax advisors. Do not wait and find a tax consultant to file your GST/HST without any mistake.
You need to file an HST return in Ontario as an organization or a small business. You should never forget the following five things while filing your HST return:
- Identify what is taxable, zero-rated or exempt.
- Use the document GST/HST Return to complete the process.
- You need to know your reporting period.
- You should also know your ITCs.
- Many businesses have to file their HST returns by e-mail.
These are the things to remember while filing your GST/HST returns; however, you can get stuck filing your GST/HST. If it happens, you must consult an accounting firm in Canada, having expert tax advisors. Lastly, always double-check the amount you want to remit to the CRA before filing your GST/HST returns.