Missed Nil GST/HST or PST Returns: Penalties and Catch-Up

Do I have to file a GST/HST return if I had no sales and nothing to pay?

Yes. A GST/HST registrant files a return for every reporting period, even with no business activity and no net tax to remit. The CRA calls it a nil return.

A monthly or quarterly return is due 1 month after the period ends. Most annual returns are due 3 months after the fiscal year-end; an annual filer who is an individual with business income and a December 31 year-end files by June 15, but any tax owing is due April 30. Most registrants must file electronically for periods that begin in 2024 or later; most charities and selected listed financial institutions are exceptions.

A truly nil missed return usually carries no GST/HST late-filing penalty, because that penalty is charged on tax owing. A missed period is nil only if the books agree: a period with sales, or with purchases that carry input tax credits (the GST/HST paid on business costs), is not nil. For PST, taxable purchases on which the supplier charged no PST may also need to be self-assessed. A CRA letter, a held refund or several missed periods also take a case out of "just file it". BC, Saskatchewan and Manitoba PST need nil returns too. This page does not cover an account with Revenu Québec.

Gather first: the periods and due dates from the CRA account; any CRA letter (demand, failure-to-file notice, refund hold); bank and card statements for every missed period; sales invoices and payout reports; purchase receipts; and, for PST, the account number, reporting frequency and statements.

What is the penalty for a missed nil GST/HST return?

The GST/HST late-filing penalty is charged on tax that was due and not paid, so a missed return with nothing owing carries no late-filing penalty. The CRA does not charge it when you owe nothing or the CRA owes you a refund.

Section 280.1 of the Excise Tax Act builds the penalty on the amounts that had to be remitted for the period and were not. For the full calculation, see the late GST/HST filing penalty.

What if some of the missed periods had tax owing?

Each missed period is judged on its own numbers. A period with net tax owing carries the late-filing penalty, which grows with each month late, plus interest on the unpaid tax from the day after the payment due date (April 30 for an annual filer who is an individual with business income and a December 31 year-end; otherwise the return's due date) until it is paid (section 280, section 228). Treating every missed period as nil can hide a debt, so compare the bank deposits and invoices with each period before filing.

Tax owing can reach other people. Each general partner is jointly liable for a partnership's GST/HST (section 272.1(5)). A corporation's directors when it failed to remit can be liable with it, subject to collection conditions and a due-diligence defence, and the CRA cannot assess a director more than two years after the person last ceased to be a director (section 323).

If the CRA has not started an audit or sent a letter, ask before filing whether a voluntary disclosure fits: it can cut the penalties and part of the interest on those periods, and a CRA letter with a deadline lowers the relief (Memorandum 16-5-1). Nil periods need none.

If the CRA has already estimated tax for a period, see estimated assessments for unfiled returns.

What else happens if nil returns stay unfiled?

The CRA can demand the return, hold refunds and charge filing-method penalties, even when no late-filing penalty applies.

• Demand to file. The CRA may demand a return and set a reasonable time to file it. Missing that date adds a $250 penalty (section 283), on top of other penalties.
• Held refunds and notices. The CRA can hold a GST/HST refund or rebate while returns are missing or amounts are unpaid under any CRA-administered act, until the returns are filed and the amounts paid. For a sole proprietor or a partner, it also holds the personal income tax refund (CRA). RC4022 also warns that a skipped nil return can bring a failure-to-file notice and a failure-to-file penalty; that penalty is charged on tax owing, so it has no amount on a true nil return (see above).
• Electronic filing penalty. Where electronic filing is required, the penalty is $100 for the first return not filed electronically and $250 for each later one (CRA). For older periods, check the rules that applied then: size was not the only test (RC4022).

How do I find the missed periods and file them?

The CRA account lists a registrant's reporting periods and due dates, so start there (CRA).

1. List every period from the registration date, or the last return filed, to today. Monthly, quarterly and annual filers have different periods. A registrant with $1,500,000 or less in annual taxable supplies is generally assigned an annual period unless it elected otherwise, so check the period on the CRA account before counting missed returns (reporting period and fiscal year).
2. Sort each period as nil, tax owing or refund, using bank statements, sales invoices and purchase receipts.
3. File one return per period, each under its own dates.
4. Pay what is owing and keep the confirmations. If a period was already filed, do not file a second return; adjust the filed one.
5. Repeat for each PST account, using its own periods and reporting frequency. Check sales and taxable purchases for business use: PST may be self-assessed where the supplier did not charge it, so no sales alone does not make the return nil.

Input tax credits generally must be claimed within four years of the period, so credits on very old periods may be lost (see filing GST/HST and input tax credits).

Can an inactive business file its own missed nil returns?

If the books and bank statements show no sales and no claimable purchases for one missed period, and no CRA letter has arrived, the return is short and is filed in the CRA account. The case needs professional judgment when any of these is true:

• A demand or failure-to-file notice has arrived, or a refund is held.
• Some missed periods had sales or tax owing, so nil and non-nil returns are mixed.
• No books exist for the missed periods, or they do not match the bank.
• The registrant is a corporation whose T2 returns are also missing.
• A PST account sits beside the GST/HST account.

A wrong "nil" can create tax owing, penalty and interest, and a return known to be wrong can draw a false-statement penalty (see below).

Can the CRA cancel the penalties or interest?

Sometimes. Section 281.1 of the Excise Tax Act lets the CRA waive or cancel GST/HST interest, and the penalties for late returns, electronic filing and missing prescribed information, up to 10 calendar years after the end of the reporting period. It does not name the demand penalty, so whether that one can be cancelled is a question for the CRA.

Relief is not automatic. The CRA's guidance looks at circumstances beyond a person's control and CRA error, and does not generally cancel a penalty for financial hardship alone; it also weighs the compliance record (IC07-1). A true nil return has no late-filing penalty to cancel, so relief matters mainly for periods with tax owing.

A business asks in its CRA account under "Request relief of penalties and interest", or on Form RC4288 (CRA). Which reasons count and what to send: see the late GST/HST filing penalty and penalties, interest and relief.

PST: do BC, Saskatchewan and Manitoba want a nil return, and what does a missed one cost?

Yes. BC, Saskatchewan and Manitoba each require a PST or RST return for every period, even with nothing to report. A PST or RST account is separate from the GST/HST account and is filed with the province. For registration, see PST registration.

British Columbia

BC requires a PST return on time even when it is nil (Bulletin CTB 005), due the last day of the month after the period (BC: report and pay).

BC's failing-to-file penalty generally applies when the return is late and the tax was also not paid on time: 5% of the unremitted amount plus 1% for each complete month, up to 12 months. A nil return has no unremitted amount. BC may instead send a demand notice for the missing nil return. Missing the notice's date can bring a penalty of the greater of $100 per failure and $25 for each day late, up to $2,500 (Bulletin CTB 005). A registered business files even with no sales and no PST to self-assess, and BC says an unfiled return can be assessed as estimated PST plus penalty and interest (BC: PST return guide).

Saskatchewan

Saskatchewan requires a "NIL" return when there is no tax to report, with total sales to Saskatchewan customers in Box A, and self-assessed tax on purchases goes in Box C (Bulletin PST-5). Returns filed and paid electronically are due on the last day of the month after the period; non-electronic filing or payment is due on the 20th. A weekend or statutory holiday moves the date to the next business day.

The Revenue and Financial Services Act (section 58.01) adds a penalty of $50 per return period for failing to file a return in time, plus interest on tax not remitted. The section is not limited to returns with tax owing. The minister may waive penalties (section 58.1), and PST-5 warns that non-compliance can lead to suspended licences.

Manitoba

Manitoba requires an RST return even with no taxable sales. If there is also no tax on purchases for own consumption to report, write "nil" on the return, or "0.00" online (Bulletin RST 004). It is due by the 20th of the month after the period.

RST 004 says late returns are penalized but gives no amount for a nil return. The Act's penalty is 10% of tax not paid on time (section 39), which a nil return does not have. Filing method is separate: RST 004 allows paper returns only for quarterly and annual filers, and a filer required to use TAXcess who files another way can face $100 for the first failure and $250 for each later one (sections 4.2 and 39(6) of the same Act). Manitoba has also warned that not filing could lead to an estimated assessment.

Should I close my GST/HST account instead of filing nil returns?

Closing fits a business that has stopped, not one that missed returns. It needs a final return.

Closing does not erase missed returns: a person who cancels remains responsible for filing all returns up to date (Memorandum 2-7), and the CRA sets the effective date (section 242). Confirm the date with the CRA, then file the outstanding returns and the final return. For PST, BC requires all returns up to the closure date to be filed and paid, even if nil, and Saskatchewan's bulletin tells a business ceasing operations to file all returns and pay all amounts before requesting closure. See closing a GST/HST account.

My corporation is inactive: what else must it file?

A corporation resident in Canada files a T2 return for every tax year, even when inactive with no tax payable (CRA). The T2 is due within six months of the year-end (Income Tax Act, section 150). It is separate from the GST/HST account: nil GST/HST returns do not file the T2, and the reverse.

An inactive corporation with a GST/HST account generally files a nil GST/HST return for each period, a nil PST return in BC, Saskatchewan or Manitoba if it holds an account there, and a T2 for each tax year. A dormant balance sheet that will not balance is covered in the nil T2 for a dormant corporation. Years behind on all of it: see catching up on unfiled corporate returns.

What if a return filed as nil was not nil?

A return filed as nil when sales happened is wrong, not just late. Do not file a new return; the CRA says to adjust the one already filed. Report the missed sales and recalculate net tax with the right tax treatment and any allowable credits; sales alone do not mean tax is owing, since zero-rated sales carry none. Any extra unpaid tax bears interest from its original payment due date.

A knowingly or grossly negligent false statement or omission in a return carries a penalty of the greater of $250 and 25% of the understated amount (section 285). A mistake is corrected by adjusting the return. See correcting a filed GST/HST return.

Example

These examples are illustrative; amounts are in Canadian dollars.

Four quiet quarters

An Ontario freelancer registered for GST/HST voluntarily, chose quarterly filing, and had no sales for four quarters. She never filed the four returns. Each quarter's net tax (tax collected less input tax credits) is C$0, so the late-filing formula gives no penalty. Her C$1,500 personal tax refund may be held until the four returns are filed and any other missing returns or unpaid amounts are dealt with.

One quarter had tax owing

Suppose instead that one quarter had C$2,000 of net tax owing and she files it six months late. The penalty is 1% of C$2,000, which is C$20, plus 0.25% of C$2,000 (C$5) for each of six full months, C$30. The total is C$50, plus interest on the C$2,000 from the day after the due date until it is paid.

A dormant BC company ignores a demand

A BC numbered company with no sales and no PST to self-assess for a year never files its PST returns. BC sends a warning letter or demand notice for one missing nil return, and the company is 20 days past the date in it. The penalty may be the greater of C$100 and C$25 a day: C$25 × 20 = C$500. The daily amount reaches the C$2,500 cap at 100 days.

Different for you?

• You missed several periods and a CRA letter arrived, or a refund is held: whether each period is truly nil, the order to file in, and whether to ask for relief or close the account all depend on what the books show. See catching up on overdue books and bookkeeping for the missed periods.
• The CRA already estimated your tax: follow estimated assessments for unfiled GST/HST returns.
• Some missed periods had tax owing: see the late GST/HST filing penalty and penalties, interest and relief.
• Your corporation is behind on its T2, GST/HST and payroll: see catching up on unfiled corporate returns or corporate tax help.
• You stopped trading, possibly years ago, and never cancelled the account: see closing a GST/HST account.
• Your personal returns are also unfiled: see catching up on unfiled personal returns.
• Your account is with Revenu Québec: this page covers CRA accounts. In Quebec the GST/HST is generally administered by Revenu Québec, and QST has its own rules.