Indirect tax ebook - Canada

Reporting

Once registered, GST/HST and QST registrants are required to file returns on a monthly, quarterly or annual basis depending on their annual sales made in Canada. The GST and HST are filed on the same return. The QST is typically a separate filing in the province of Quebec but in limited cases a joint GST/HST and QST return is permitted to be filed.

Monthly returns are required if the Canadian taxable revenue of the person and the associated group is over $6 million. Quarterly returns are required if the taxable revenue of the person and the associated group is over $500,000 and is $6 million or below. Annual filing is required where the revenue is $500,000 or below. A person can elect to file more frequently if so desired and would do so if refunds are anticipated.

Returns are due within one month after the reporting period for monthly and quarterly filers and within three months for annual filers. Any net payable for a reporting period must be paid at the time of filing. Annual filers are required to post quarterly instalments after their first year.

Returns in a net refund position will be paid out to the registrant. The registrant must have the required documentary support on hand prior to making an ITC or ITR claim on the return.

Provincial RST returns are generally filed on a monthly basis and are due anywhere from 20 to 23 days following the end of the reporting month depending upon the particular province. Some relief is available to file on a less frequent basis but only for very small filers.

Group or consolidated filing is not permitted federally or provincially. Each entity must file on its own.

Returns are prepared on an accrual basis. If your customer fails to pay for the taxable goods or services purchased and you have remitted the respective federal and provincial sales taxes on the supply, you can claim a partial bad debt relief from the respective taxing authorities. However, the debt must be written off from your books and record in order to be eligible for the relief and the relief itself does not necessarily equal the tax and the amount is prorated depending on the amount of consideration already received.

The federal government and the respective provincial governments have instituted systems of penalties in their tax legislation to discourage failure to comply with their respective sales tax system. In addition, interest is charged on amounts outstanding. These interest and penalties are generally not deductible for income tax purposes. 
 

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & filing
• General tax application/Time of supply