HST Returns

A business must register for HST/GST once its worldwide taxable supplies (its own plus those of associated persons) exceed $30,000 in any single calendar quarter, or over four consecutive calendar quarters. Below that, you're considered a "small supplier" and registration is optional. The threshold counts taxable and zero-rated supplies but excludes exempt supplies (like residential rent, financial services, or most healthcare). Once you cross the threshold, you must register within 29 days, and you become liable to collect HST on all taxable supplies from that point forward, even on the transaction that pushed you over.

Under the regular method, you charge HST on sales at the applicable rate (e.g., 13% in Ontario), claim Input Tax Credits (ITCs) for HST paid on business expenses, and remit the net to CRA. Under the Quick Method, you charge customers HST as normal but remit a reduced flat percentage of your total HST-inclusive sales (e.g., 8.8% for service businesses in Ontario), and you don't claim ITCs on most operating expenses (capital purchases excepted). The Quick Method typically saves money for service-based businesses with low input costs (bookkeepers, consultants, lawyers) where the reduced remittance rate exceeds the ITCs you'd otherwise recover. It's not available to professionals like accountants or financial consultants in some configurations and has revenue caps (currently $400,000). A side-by-side calculation each year confirms which is better.

ITCs let you recover the HST you paid on business expenses by deducting it from the HST you collected. You claim them on your HST return for the period the expense was incurred. To qualify, the expense must be for use in commercial (taxable) activities, you must have a valid invoice showing the supplier's GST/HST registration number and the tax amount, and the expense must be reasonable. Common non-qualifying or limited-ITC items: meals and entertainment (ITC limited to 50%), club dues for recreational facilities (no ITC), expenses related to exempt supplies (no ITC), personal-use portions of mixed-use expenses (must be excluded), and the personal portion of passenger vehicles. Capital property like equipment and vehicles have additional rules around primary use percentages.

Late filing typically triggers a $250 penalty if there's a balance owing, plus interest on the unpaid HST from the original due date. Repeat late filers and those who fail to file when required can face larger penalties. To correct an error in a previously filed return, you can either (a) make the adjustment on a future return if the error is small and discovered quickly (within strict CRA limits), or (b) file a formal request via Form GST189 (general rebate) or Form RC4288 (taxpayer relief) for larger or older corrections. Voluntary disclosure under the CRA's VDP is available for unfiled returns or significant errors, potentially eliminating penalties if the disclosure is voluntary, complete, and made before CRA enforcement begins.