GST/HST is part of doing business in Canada. Whether you’re new or well-established, your corporation must be GST/HST compliant to avoid penalties, audits and reputation risk. Consult with a corporate tax accountant Ottawa to learn about your GST/HST compliance requirements based on your business. Here are the key tips to help Canadian corporations be GST/HST compliant.
1. Register Early
Most businesses that sell taxable goods or services in Canada must register for a GST/HST number with the Canada Revenue Agency (CRA). If your business earns more than $30,000 in gross revenue over 4 consecutive calendar quarters, you must register. But register early, even before you hit the threshold, because it allows you to claim input tax credits (ITCs) on business purchases and expenses.
2. Know the Applicable Tax Rate
Canada has federal GST (5%) and in some provinces HST which combines the GST with a provincial sales tax. HST rate varies by province, such as 13% in Ontario and 14% in Nova Scotia. If you sell across provinces, you need to know which rate applies based on where your goods or services are delivered.
3. Charge the Right Tax on Invoices
Make sure your corporation charges the right GST or HST on customer invoices. Depending on where your customer is located, a corporate tax accountant Calgary can advise which GST or HST rate to use. Invoices should show:
- The amount of GST/HST charged
- Your business number
- The total amount before and after-tax Failure to issue proper invoices can result in denied ITCs for your customers and compliance issues for your business.
4. Keep Accurate Records
Accurate record-keeping is the foundation of tax compliance. Your corporation must retain all records related to GST/HST, such as invoices, receipts, contracts, bank statements, for at least 6 years. These records must be organized and easily accessible in case of an audit.
5. File GST/HST on Time
GST/HST returns must be filed based on your assigned filing period (monthly, quarterly or annually). Missing deadlines can result in interest and penalties. Set up calendar reminders or use accounting software to track and submit returns on time. Even if you have no taxable sales during a filing period, you must still file a “nil” return.
6. Claim ITCs Correctly
Corporations can recover GST/HST paid on eligible business expenses by claiming ITCs. But not all expenses qualify. Make sure you:
- Keep receipts and documentation. Only claim the business use portion
- File within the 4-year limit. Incorrect ITC claims can trigger CRA audits or reassessments.
7. Stay Up to Date with Changes
GST/HST rules and rates change due to federal or provincial government updates. Subscribe to CRA newsletters or your corporate tax accountant to stay informed. For example, digital services and cross-border sales have had recent regulatory changes that may impact your business.
8. Consider Hiring a Corporate Tax Accountant
GST/HST compliance can get complicated especially if you have operations in multiple provinces or international transactions. A corporate tax accountant can ensure you meet all requirements, maximize ITCs and avoid costly mistakes. They can also help with audit preparation and representation if the CRA reviews your filings.
9. Be Ready for CRA Reviews or Audits
The CRA conducts desk and field audits to verify GST/HST compliance. Corporations should be prepared by:
- Keeping clean and up-to-date financial records
- Reconciling filed returns with internal financial statements
- Cooperating fully during the review process Being prepared can resolve issues quickly and minimize disruption.
10. Use Technology to Simplify Compliance
Modern accounting software can automate tax calculations, generate compliant invoices and track filing deadlines. Using cloud-based systems ensures your corporation remains efficient and accurate in meeting its GST/HST obligations.
Conclusion
GST/HST compliance is an ongoing requirement for Canadian corporations. By understanding your obligations, keeping accurate records and seeking help when needed, your business can avoid penalties and operate with confidence. Stay proactive, informed and organized and you’ll navigate GST/HST regulations with ease.
