Filing GST/HST returns and claiming input tax credits

How often do I file, and when is my GST/HST return due?

A GST/HST registrant files for every assigned reporting period, including a period with no sales or tax to remit. Check the periods and exact due dates in your CRA account; a nil return is still required unless the CRA has approved a designated reporting period and its conditions still apply. CRA: Reporting requirements and deadlines; CRA: Designated reporting periods

For most businesses, the CRA assigns a period based on taxable supplies made in Canada by the business and its associates. The calculation includes most domestic zero-rated supplies but excludes exempt sales, supplies made outside Canada, zero-rated exports and zero-rated financial services, taxable sales of capital real property, and goodwill. A business can elect a more frequent period; revenue growth can also change its assigned period. File the election in your CRA account or on Form GST20, which the registrant or an authorized person signs, generally within two months after it takes effect. A new registrant electing from its registration date must do so by that date. CRA: Reporting periods; CRA: Form GST20

An annual sole proprietor with a December year-end and business income for income tax purposes instead pays by April 30 and files by June 15. If that proprietor had no business income, the general three-month deadline applies. Listed financial institutions generally have six months after year-end, unless listed only because of a section 150 election. If a due date falls on a weekend or CRA-recognized holiday, receipt on the next business day is on time. CRA: Filing and payment deadlines

How do I file online: through My Business Account or with an access code?

Most GST/HST registrants must file electronically. In My Business Account, use its built-in GST/HST NETFILE service; without an account, use the online NETFILE form and a GST/HST access code. An authorized representative can use Represent a Client. CRA: How to file

If you need a code for standalone NETFILE, follow the CRA's access-code instructions. You can view it in My Business Account or contact the CRA if you cannot use an account or the online reset.

Charities and selected listed financial institutions are exceptions to mandatory electronic filing. The CRA can grant another registrant a case-by-case exemption if electronic filing is not possible. Filing a return does not itself pay an amount owing. CRA: Reporting requirements

What goes on each line of the GST/HST return?

Under the regular method, reconcile sales and tax charged to invoices first, then total eligible purchase credits. GST/HST on an unpaid customer invoice generally belongs in the period when the tax became collectible; waiting for the customer to pay can understate line 103. CRA: Return instructions

Line 205 covers tax due on certain real-property or emission-allowance purchases; line 405 covers other self-assessed tax, including some imported supplies. Use the CRA's return working copy and line-by-line instructions for those transactions and for Quick Method returns, where line 101 and the tax calculation differ.

Which purchases can I claim input tax credits on?

A GST/HST registrant can generally claim the GST/HST paid or payable on reasonable purchases used to make taxable supplies, including zero-rated supplies. Usually, the purchase is for commercial activity while registered; keep evidence before filing and claim within the time limit. Special rules can cover property on hand at registration and prepaid services or rent for periods after registration. CRA: Input tax credits; Excise Tax Act, section 169

Rent, office supplies, telephone service, delivery and professional fees can qualify when used in commercial activities. Most capital equipment has a different rule: commercial use over 50% permits a full ITC; use at or below it permits none. Passenger vehicles have separate rules. A zero-rated sale is taxable at a zero rate, so related purchase tax can qualify; an exempt sale generally cannot support ITCs. Personal use does not qualify. CRA: ITC eligibility percentages

GST paid on imported goods for commercial use may also qualify. Keep the import documents showing the tax; entitlement can depend on who caused the import. CRA: Imported-goods ITC policy

GST/HST on a purchase from a supplier registered only under the simplified digital-sales system cannot be claimed as an ITC; tell that supplier your regular GST/HST registration status before it charges you. Services consumed before registration generally do not qualify. CRA: Input tax credits

What must a receipt show before I claim an ITC?

Keep an invoice, receipt, contract or other business record with the required details before filing the return that claims the ITC. The requirements rise with the total sale, and details can be spread across supporting documents. A supplier's GST/HST number is required at the higher bands; check it if the charge looks wrong. CRA: Records to support ITCs

The receipt table does not turn a tax-free purchase into an ITC. Match each claim to GST/HST actually paid or payable by your business and keep the record with your books. CRA: Input tax credits

Can I claim ITCs on a car, phone or home office I also use personally?

For most businesses, an operating expense used 90% or more in commercial activities supports a full ITC; use of 10% or less supports none. Between those points, claim a fair and consistent commercial-use share, using call records or a mileage log for shared phone or vehicle costs. Financial institutions follow different rules. CRA: General Information for GST/HST Registrants

The purchase of a passenger vehicle is different from fuel or repairs. A corporation generally applies the primary-use rule. For an individual or partnership, commercial use of 90% or more can support a full vehicle ITC; use of 10% or less supports none. Between those points, the ITC generally follows the commercial-use share of capital cost allowance. Vehicle cost limits also apply. A later change in commercial use can change the tax or ITC reported. Check the CRA passenger-vehicle chart and change-in-use rules before entering an ITC. Income-tax write-offs are covered separately in Capital cost allowance.

For a home office, the workspace must be your principal place of business, or be used at least 90% to earn business income and on a regular and continuous basis for meeting clients, customers or patients. Even then, claim only eligible GST/HST on the business share of costs. Meals and entertainment usually have a further limit: where the income-tax deduction is limited, the ITC is normally 50% of eligible tax. CRA: Home office and meals

How far back can I claim ITCs I forgot?

Most registrants can put a missed ITC on a later return, generally by the due date of the last reporting period ending within four years after the original period ended. Do not file a second copy of the old return just to add the omitted ITC. CRA: ITC time limits; CRA: Changing a return

The window is generally two years for listed financial institutions and certain large businesses, starting from the end of the fiscal year containing the original period. CRA lists exceptions for some deemed financial institutions and large businesses with predominantly taxable supplies; they may retain four years. Check the exact period and due date before carrying an old amount forward. A missed sale or tax adjustment may instead require a return change. CRA: ITC time limits

Should I use the Quick Method or the simplified method for ITCs?

These methods solve different problems. The Quick Method changes how an eligible business calculates tax to remit and removes most operating-expense ITCs. The simplified ITC method lets an eligible business total tax-included purchases instead of recording each tax amount separately; it can also be used with the Quick Method for purchases that still qualify for ITCs. CRA: Quick Method; CRA: Simplified ITC method

For simplified ITCs, group eligible tax-included purchases by GST/HST rate, then multiply each group by the tax rate divided by one plus that rate. Calculate eligible items outside the grouped method separately and keep the supporting records. CRA: Simplified ITC calculation

Businesses that provide bookkeeping, financial or tax consulting, or tax-return preparation in their commercial activities cannot use the regular Quick Method. The same exclusion applies to legal and accounting services provided in a professional practice. The revenue test excludes financial services and sales of real property, capital assets and business goodwill. Elect online or on Form GST74, signed by an authorized person: annual filers generally elect by the first day of their second fiscal quarter; monthly and quarterly filers by the due date of the return for the first period using it. A new annual registrant with a short first period can elect by that return's due date. The election generally cannot be revoked until it has been in effect for a year. Its remittance rate depends on the supply and province; use the rate for the transaction date, especially for a period spanning Nova Scotia's rate change. If the election was effective at fiscal-year start or, for a new registrant, at registration, the Quick Method can also give a 1% credit on the first $30,000 of eligible tax-included sales. The simplified ITC method needs no election form, but a qualifying business that starts it must generally keep using it for at least a year. Compare both calculations using your sales mix and actual purchase tax before electing. CRA: Quick Method; CRA: Form GST74; CRA: Simplified ITC method

When do I pay, and what if the CRA owes me a refund?

Pay a GST/HST balance by the filing period's payment deadline, even if the return can be filed later. Annual filers generally need quarterly instalments when net tax in both the previous and current fiscal years is at least $3,000. Instalments are due one month after each fiscal quarter. A short first fiscal year may need annualizing; check the CRA account for the instalment schedule. CRA: Deadlines; CRA: Instalments

You can pay through CRA online payment or a participating financial institution. A refund may result after ITCs, adjustments, instalments, rebates and any self-assessed tax are included. A negative final balance goes on line 114; a positive balance goes on line 115. The CRA normally issues refunds within four weeks, but missing information or unfiled returns can delay or hold payment; other tax debts may reduce it. Check the return and assessment status in My Business Account. CRA: After you file; CRA: Refund holds and offsets

How does GST/HST filing work in Quebec?

GST/HST registrants with a physical business location in Quebec generally file with Revenu Québec; selected listed financial institutions follow a different route. QST registrants can use a combined return. Calculate GST/HST ITCs and QST input tax refunds separately from sales and purchase records; a nil period generally still requires a return. Revenu Québec: Reporting GST/HST and QST; CRA: GST/HST and Quebec

File through Revenu Québec's My Account for businesses or its GST/HST and QST Returns express service, which uses a clicSÉQUR express access code. Check your assigned periods and due dates in the Revenu Québec account. For sales-tax obligations outside the GST/HST and QST return, see Provincial sales tax.

Example

Illustrative Canadian-dollar amounts. An Ontario corporation using the regular method bills C$10,000 for taxable services plus C$1,300 HST during a quarter. It also pays C$2,000 for fully business-use supplies plus C$260 HST, with invoices that support the credit. The customer has not yet paid the sales invoice.

The corporation reports C$10,000 of sales on line 101, C$1,300 of HST collectible on line 103, and a C$260 ITC on line 106. With no other adjustments or payments, line 109 net tax and line 115 payment are C$1,040: C$1,300 less C$260. The unpaid customer invoice does not defer the HST. Its return and payment are due one month after the quarter ends. CRA: Return working copy

Different for you?

• Unsure whether registration was required: see When to register for GST/HST.
• Filed or paid late: see Penalties, interest and relief.
• Years of unfiled sole-proprietor returns: start with Catching up on unfiled returns.
• Years of unfiled corporate returns: start with Catching up on unfiled corporate returns.
• A CRA request for ITC proof or a large disputed claim: see Reviews, audits and voluntary disclosure and gather supplier invoices, GST/HST numbers, purchase records, prior returns and notices.
• A new rental property: see GST/HST on residential property.
• A foreign seller under simplified registration: see Non-resident and digital sellers.
• Recurring filing or mixed personal and business expenses: gather sales by province, tax collected, supplier invoices and business-use records for bookkeeping help.