One of the most frequent business tax challenges we hear about is falling behind on filing HST returns.
If you’re filing HST returns late, here are four facts you need to know:
- If you earn more than $30,000 of self-employed income, you must collect, file, and remit HST to the Canada Revenue Agency.
There are some exempt items that consumers don’t have to pay HST on, such as qualifying food and beverages, but for everything else you must collect HST.
- After four years, you can’t include input tax credits anymore.
Most registrants can only claim their input tax credits for four years after the due date for the return. Businesses with more than $6 million in threshold revenues and financial institutions have even less time.
- HST is trust money and is collected more aggressively by the government.
While the CRA will collect any unpaid tax debts, they are particularly aggressive on GST or HST returns.
This is because GST and HST is collected for the express purpose of going to the government and held in trust until it is returned — it is not meant to be used in your business. So, if it is not being paid to the government, they will assume that you are using it for another purpose.
- Filing HST late is not illegal, but not filing at all, or filing and declaring expenses that aren’t legitimate or failing to declare income is.
If you’re late filing your HST, you will likely be subject to interest and a late-filing penalty, but your actions aren’t against the law.
However, if you do not file at all, or if you lie on your tax return, that is illegal and could result in court action.
If you’re late filing an HST return, don’t panic. You can still file, although you may be subject to a late-filing penalty and interest fees. In the future, be sure to set the HST money aside in a separate account and don’t touch it for your other business needs.
If you can’t repay the HST return because you don’t have the money, that is a bigger problem. Fuller Landau Debt Solutions can help. Our Licensed Insolvency Trustees can help assess your self-employed finances and make a plan to deal with debt.
Contact us today for a free consultation. Call (647) 952-6081 or visit www.fullerdebt.com.