A lot of business owners are being advised to become a GST/HST registrant with their bookkeepers or accountants as most goods and services sold within Canada are subject to GST/HST. Once the account is registered, businesses start to collect GST/HST and file the returns and submit the GST/HST remittances accordingly to the CRA.
Did anyone question about filing frequency? Should it be filed on a quarterly basis? I’ve seen a lot of businesses have no idea and keep filing the GST/HST returns as it was set up at the beginning.
Is it best practice?
The answer MAY BE no.
As a GST/HST registrant, the reporting periods determines how often the business prepares and send the return to the CRA. At the time that when businesses become a registrant, you can SELECT the reporting period based on the threshold amount.
So, how much is threshold amount then?
The CRA has provided a formula to determine the threshold amount. Here is the link. Simply speaking, annual taxable sales below $1,500,000, you have options in selecting anyone of annually, quarterly and monthly reporting period.By default, the CRA will assign the least frequent reporting period to the business. In some cases, the reporting period is mistakenly selected at the beginning. In one case, I’ve seen business files quarterly returns and cut the cheque on a quarterly basis without knowing that they can change the reporting period. Based on the fact that their annual taxable sale is way below the threshold amount, they should file GST/HST annually. You can image how busy they are at quarter-end.
So, what if the business taxable sale is below threshold amount?
File an election for GST/HST reporting period. Here is the link. Mind you, the reporting period can be changed at the beginning of the fiscal year because the reporting period must be in line with the fiscal year-end.
What’s the benefit?
Obviously, save a lot of time and energy in getting information prepared for GST/HST filing. A lot of businesses wear so many hats. Area of improvement that leads them refocus on the business will be a big help. In addition, changing the reporting period may help in better cash flow as well. The assumption here is that taxable sales are over the expenses. If you are often in a refund position in GST/HST filing, then a quarterly filing may still be a good fit. Always, review your situation and take action.
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