If your business makes more than $30,000 in revenue over four consecutive quarters, you are required to register for HST (Harmonized Sales Tax) with the CRA. Once registered, you must collect HST from your customers, keep track of it, and remit it to the government on a regular basis. Missing this can lead to penalties and interest that grow very fast.
Many business owners, especially those who are new to running a company, find HST confusing. When do you charge it? How do you file? What can you claim back? These are questions that come up all the time, and getting the answers wrong can be costly.
How HST Works for Businesses
When you sell goods or services, you collect HST from your customers on top of your regular price. In Ontario, the HST rate is 13 percent. You add this to your invoices, collect it, and then hold it until it is time to remit.
At the same time, when your business spends money on goods and services for business purposes, you pay HST on those purchases too. This is called Input Tax Credits (ITCs). The CRA allows you to deduct these ITCs from the HST you owe, so you only remit the difference.
Filing Periods – How Often Do You File?
The CRA assigns a filing period based on your annual revenue. If your revenue is less than $1.5 million per year, you usually file annually. Between $1.5 million and $6 million, you file quarterly. Above $6 million, you file monthly. Knowing your filing period is important because missing a deadline, even by a day, results in penalties.
If you find HST filing confusing or time-consuming, Webtaxonline handles all HST and GST filings for businesses across Canada. Their team makes sure your returns are filed on time, your ITCs are properly claimed, and you are always in good standing with the CRA.
Common HST Mistakes to Avoid
One mistake is charging HST when you are not yet registered, or not charging it when you should be. Another is using HST money collected from customers for business expenses, then not having enough to remit when the deadline comes.
Some businesses also miss out on ITCs they are entitled to, simply because they did not track their purchases properly or did not keep the right records. Receipts matter. The CRA can ask to see them during an audit.
Self-Employed Individuals and HST
If you are a freelancer, contractor, or self-employed professional who makes more than $30,000, the same HST rules apply to you. Real estate agents, consultants, IT professionals, and many other self-employed individuals often get surprised when they find out they have been collecting HST without remitting it.
Getting on top of your HST obligations early, and keeping good records throughout the year, makes the whole process much simpler. Working with a professional accountant means you never have to worry about whether it is done right.
