How to Pay the GST/HST that Your Small Business Owes

By Randall Orser | Business

If you are a small business whose total taxable revenue before expenses is $30,000 or less in the last four consecutive calendar quarters or a public service such as a non-profit organization with total tax revenues of less than $50,000 in the last four consecutive calendar quarters you are classified as a GST/HST small supplier and you do not have to charge GST/HST.  That applies unless you are a taxi or limousine operator or a non-resident performer who sell admissions to seminars or other events, who must register for GST no matter how small their income is.

If you do not qualify as a small business then you will need to charge, collect and remit GST.  To start the process you will need to register for a GST account with the CRA.  You will then keep track of all the GST that you charge or pay and complete a GST tax return each quarter or assigned reporting period which can also be monthly or annually depending upon your total taxable supplies of goods and services in the previous fiscal year when you register.

Even if you do not qualify as a small supplier it may be to your advantage to register for the GST.  Though you will be paying GST on the goods and services that you use in the course of your business you will also be able to recover some of the GST that you paid out on business purchases through  Input Tax Credits.

You must submit your GST returns on time according to your reporting period schedule even if you have not conducted any business or collected any GST during that period.  On each report you will show the amount of GST that you charged your customers and the amount of GST that you paid or owe your suppliers.  The difference between these two amounts is the amount of tax you will pay.  Of course it is not as simple as it sounds as you may have GST charged but not paid to you and bad debts adjustments so you may need to refer to   RC4022 - General Information for GST/HST Registrants for help.  

When your form is completed you have a number of ways that you can pay the amount you owe.

  • Pre-authorization - authorize the CRA to take a take a payment from your bank account
  • Make your payment on line or phone it in through your bank's telephone and online banking services, or pay it in person at your bank.
  • E-transfer, credit card or PayPal
  • By cheque through snail mail using the personalized GST return form sent to you by the CRA.
  • Electronically - the CRA encourages all registrants to use electronic GST filing methods through Netfile,  Telefile, Electronic Data Exchange, or GST Internet File Transfer. 
  • CRA My Business Account which also allows you to manage other tax related payments such as payroll, corporate income tax, excise tax.

If you do not File a GST return on time, unless you have a $0 balance you will be subject to penalties. 

From an article by Susan Ward

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President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.