Unfiled GST/HST Returns: Notice of Assessment and Catch-Up

Do I still have to file GST/HST returns the CRA already estimated?

Yes. A registrant files a return for every reporting period, even a period with no sales or no tax to remit (CRA: reporting requirements). The CRA's estimate does not replace the return: an assessment does not remove the requirement to file the actual returns (CRA: filing responsibilities). A person who should have registered but did not also files for each period with net tax to remit (Excise Tax Act s. 238(2)).

This page covers GST/HST the CRA administers. If your business is located in Québec, GST/HST returns generally go to Revenu Québec instead (CRA: RC4022); see Filing GST/HST returns and claiming input tax credits.

One missing period with intact sales records is the simple version. A case is not simple when the CRA has already estimated an amount or sent a demand to file, a refund is held, several periods are unfiled, input tax credits may be lost, sales were never reported while unregistered, or there are no sales records. An estimated assessment is the CRA's own figure for a period you never filed, sent as a notice of assessment. Input tax credits are the GST/HST you paid on purchases for your taxable business activities, which you subtract from the tax you collected. Which periods to file first, how sales are rebuilt, what to claim, and whether to file or object are judgment calls.

Gather before filing anything:

• Every CRA notice and letter, with the date each was sent.
• The reporting periods listed in your CRA account, and which are unfiled.
• Sales by period: invoices, payment and platform statements, bank deposits.
• Business expense invoices and receipts.
• Bank statements for any gaps.
• Sign-in access to your CRA account.

A notice of (re)assessment arrived for an unfiled GST/HST return: do I file or object?

File the return for the period on the notice unless the notice tells you not to; if it does, you file an objection instead (CRA: GST/HST objection decision tool).

Filing supplies the real figures; it does not by itself cancel the estimate or extend the objection period. Check that the next notice shows your figures in place of the estimate. A new notice of (re)assessment carries its own objection deadline, while the deadline on the original notice runs from the day it was sent, not from the day you file (s. 301). Note the date on every notice and decide early whether you also need to object.

Why does the CRA's estimate stand until I file, and is the tax owed without an assessment?

The Act lets the CRA assess even when no return was filed, and an assessment is valid and binding until an objection, appeal or reassessment changes it (s. 299). The tax is owed either way: liability for tax, penalties and interest is not affected by an incorrect assessment or by the absence of one.

While a period stays unfiled, penalties and interest keep accruing until the account is compliant (CRA: filing responsibilities). The CRA can also hold a GST/HST refund or rebate until required returns are filed and outstanding amounts are paid (CRA: after you file). The estimate is the CRA's own figure, so the real balance can come out lower or higher.

The business is not the only one who can owe. Each partner other than a pure limited partner is jointly and severally liable for GST/HST that became payable by the partnership during their membership, and a former member stays liable for that period (s. 272.1(5)). The directors of a corporation when it failed to remit net tax are jointly and severally liable with it for the tax and the related interest and penalties, subject to collection conditions and a due-diligence defence (s. 323). A director assessment cannot be made more than two years after the person last ceased to be a director. For the corporate side, see Catching up on unfiled corporate returns.

How do I work out sales, tax collected and input tax credits for each period?

Work period by period, using the due dates in your CRA account (CRA: deadlines; s. 238):

1. Total the taxable sales for the period, and the GST/HST charged or owed on them, including sales where no tax was charged.
2. Add the purchases used in your taxable business activities that have an invoice supporting a credit. Purchases for exempt activities or personal use generally do not qualify (s. 169).
3. Net tax is the tax from step 1 less the input tax credits from step 2.

If a Quick Method election was in effect for a period, the calculation is different and credits for operating expenses are not claimed; check this before rebuilding that period (CRA: input tax credits).

A credit needs documents in hand before it is claimed. The detail required grows with the purchase amount. These are the bands for purchases made on or after April 20, 2021; lower bands applied before that date (Fall Economic Statement Implementation Act, 2023, s. 142; CRA: input tax credits):

With no books, rebuild sales from bank statements first: see Rebuilding books from bank statements; for platform or USD payouts, see Rebuilding PayPal and USD income for past years. If customers were never charged GST/HST, see Registered but did not charge GST/HST. For the return lines, see Filing GST/HST returns and claiming input tax credits.

How do I file a past-due return, and is electronic filing required?

Returns are filed in your CRA account (My Business Account or Represent a Client). Have your business number and the period's "from" and "to" dates ready; a period with nothing to report can be filed as a nil return (CRA: in your CRA account). If the account will not take an old period, ask the CRA before mailing a paper return.

Electronic filing is required for reporting periods that begin in 2024 or later, except for charities and selected listed financial institutions; the penalty is in the table below (CRA: how to file; Budget Implementation Act, 2023, No. 1, s. 112). The CRA's deadlines page words the start differently, as periods ending in 2024 and later (CRA: deadlines); the enacted rule counts the day a period begins. A period that began earlier follows the earlier rules, which did not reach every registrant (Electronic Filing Regulations, s. 2).

Filing reports the balance; paying it is a separate step, and interest runs until the amount is paid (s. 280). If you cannot pay the balance in full, see CRA payment arrangements for business debt. The CRA processes most returns within 4 weeks (CRA: after you file).

Restarting GST/HST filing after a long gap: can I skip the older periods?

Do not assume an older period can be skipped. Each unfiled period stays owed (s. 299), and a refund can be held until the required returns are filed. The Act sets time limits for assessing net tax, but they count from the later of the return's due date and the day the return was filed, and they have exceptions (s. 298). That count depends on a filing day, so do not assume an unfiled period has aged out.

The CRA's filing and assessment pages do not set a cutoff for how many past periods it may require. Settle which periods to file, and in what order, before filing any.

If the business has stopped making taxable supplies, closing the account is a separate step: the CRA still requires a final return and any amount owing (CRA: close your account), and returns stay owed until it is told the account is closed (CRA: filing responsibilities). For closing instead of filing nil returns, see Missed nil GST/HST and PST returns.

How far back can I claim input tax credits I missed?

Generally four years, but the cutoff is a filing deadline, not a date count: the return claiming a credit must be filed by the due date of the return for the last reporting period that ends within that time after the period the credit belongs to (CRA: RC4022; s. 225(4)). A shorter limit of two years applies to listed financial institutions and certain large businesses.

A credit missed on an earlier return can be claimed on a later return, as long as that return is filed inside the same window. A late return for an old period may come too late to claim that period's credits. The Act can also let the CRA allow an unclaimed credit when it assesses the period, if the credit would have been allowed on a timely return and the required documents exist (s. 296(2)). Whether that reaches your credits is a point to confirm before filing the oldest periods.

How long do I have to object, and when does objecting make sense?

You have 90 days after the notice is sent (s. 301). The notice of objection is in the prescribed form and manner, with your reasons and the relevant facts.

Objecting is the CRA's route when the notice tells you not to file, or when you disagree with a figure on a return you did file. For an unfiled period where the notice does not say that, the CRA's route is the return. The right to object is not limited to those cases, and the 90 days run from the day the notice was sent whichever route you take, so settle early whether you need both.

After the deadline, the Minister may extend it only if you apply within one year after it expired. You must show you were unable to act or had a genuine intention to object, that an extension is just and equitable, and that you applied as soon as circumstances allowed (s. 303).

What penalties and interest apply to returns filed late?

The late-filing penalty does not apply when nothing is owing or the CRA owes you a refund (CRA: penalties; CRA: RC4022). The interest rate is reset each quarter; it is 7% for the quarter shown in the figures table below (CRA: interest rates; s. 124).

For the penalty formula in depth, see Late GST/HST filing penalty. If every missed return was a nil return, see Missed nil GST/HST and PST returns.

Can penalties and interest be cancelled, and can a voluntary disclosure help?

In limited cases the CRA can cancel or waive GST/HST penalties and interest, such as extraordinary circumstances, actions of the CRA, or inability to pay. It also weighs your compliance history, whether you took reasonable care, and how quickly you acted to fix the delay (GST/HST Memorandum 16.3).

Ask in your CRA account or on Form RC4288 (CRA: how to apply). For eligible GST/HST penalties, the reporting period must have ended within 10 calendar years before the year of the request. For interest, the CRA can consider interest that accrued within that span even on an older period. The window moves forward each January 1 (CRA: time limit). Which reasons count and how to ask are in Penalties, interest and relief.

A voluntary disclosure can reduce penalties and interest if it is voluntary, complete, covers a period at least one reporting period past due, and includes payment or a request for a payment arrangement (GST/HST Memorandum 16-5-1). The CRA gives more relief when an application is unprompted than when it is prompted. A letter or notice (other than a general education letter) that sets a deadline to file or correct an omission is among the prompted situations, so an estimated assessment or a demand to file may put you there; that is the CRA's call.

The memorandum excludes penalties and interest already assessed, and applications that only increase input tax credits, other credit adjustments or rebates without any corresponding increase in tax liability. An application is not voluntary if an audit or investigation of the information being disclosed has started against you or a related person, whether by the CRA or by another authority such as a law enforcement agency or securities commission. Timing matters: get advice before filing the returns if a disclosure may fit. How an application works and the relief levels are in Reviews, audits and voluntary disclosure.

What if I should have registered earlier and never did?

The date you should have registered sets which periods you file and which purchases carry credits. Registration was required once a person making taxable supplies in Canada passed the small-supplier limit of $30,000 (s. 240). When sales pass the limit in a single quarter, the effective date of registration is no later than the day of the supply that made you exceed the limit, and you start charging GST/HST on that supply (CRA: when to register).

Input tax credits generally need the tax to have become payable while you were a registrant (s. 169), so the effective date the CRA accepts changes which purchases carry credits. For purchases made before registration, see Claiming GST/HST paid before registering. See When to register for GST/HST for the effective date and how to request an earlier one, and the voluntary disclosure section above for coming forward before the CRA contacts you. Drivers on rideshare or delivery apps: see Rideshare and delivery drivers who never registered.

Example

These examples use Canadian dollars and round, illustrative numbers.

Ontario consultant, four quarters unfiled

A consultant who elected quarterly filing never filed the four returns for one year. Sales were C$60,000. The CRA estimated C$9,000 owing. The real returns show C$7,800 of HST collected (13% of C$60,000) and C$2,100 of input tax credits, so the balance is C$5,700, not C$9,000. Filing the four returns is what lets the CRA replace the estimate. Penalties and interest are worked out on what each quarter owed, from its own due date.

Alberta tradesperson, GST only

An annual return was never filed and the CRA sends a notice of assessment for C$5,000. Taxable sales were C$80,000, so GST collected was C$4,000. Input tax credits were C$1,200, so the real balance is C$2,800. The notice does not tell the tradesperson not to file, so the return is the route. Filing does not extend the 90 days to object, which run from the date the notice was sent. If the estimate is still disputed as that date nears, an objection may also be needed.

Corporation with no activity, nine nil quarters

A corporation stayed registered but had no sales, purchases or other amounts to report in any of nine quarters, so each return would be nil, with C$0 to remit, and it filed none. No late-filing penalty applies when nothing is owing, but nine returns are still owed. Exempt sales would not make a return nil: they are still reported. If the CRA sends a demand to file and the corporation does not file, a flat C$250 penalty applies.

Different for you?

• You hold an estimated assessment, a demand to file or a held refund, or several periods are unfiled and the sales records are gone: which periods to file first, how sales are rebuilt, what to claim, and whether to file or object are judgment calls. Bring the notices and bank statements to bookkeeping help.
• Your whole corporation is behind (T2, GST/HST, payroll): see Catching up on unfiled corporate returns.
• Every missed return was a nil return: see Missed nil GST/HST and PST returns.
• You drove for a rideshare or delivery service and never registered: see Rideshare and delivery drivers who never registered.
• You need to book the reassessment, penalties and interest: see Recording CRA reassessments and penalties.
• The CRA is reviewing a return you did file: see GST/HST reviews and audits and Reviews, audits and voluntary disclosure.
• Your personal returns and books are also behind: see Catching up on unfiled Canadian tax returns and Catching up on overdue books.