While many people worry about being audited, audits are relatively rare. It’s much more common – and potentially very expensive – to be caught unregistered for the GST/HST.
One of the most costly mistakes you can make is not registering for the GST/HST when you reach the $30,000 mark. The scary thing is, CRA usually catches up to you a few years later, and retroactively asks for all the GST/HST you were supposed to have been billing/collecting all that time.
Registering for the GST/HST is possible at any time, but it’s only mandatory when you’ve billed at least $30,000 in self-employment in any 12 month period. As soon as you’ve crossed that threshold, however, you’re responsible for knowing that it’s time to register. You do not receive a warning or notification from CRA saying it’s time to do so.
Our office has learned that CRA is planning to start reviewing self-employed income tax returns for the 2012 tax year, looking for people who report billing over $30,000 and confirming that they have registered for the HST. If they haven’t, CRA will retroactively register them and demand remittances retroactively as well. In other words, you’re responsible for delivering the HST you should have been collecting for the past year or two.
The good news is, even if you didn’t register when you should have, you can still do it now. So long as you’re registered before CRA gets to your file – even if you registered the day before they call – they’ll leave you alone.
So if you did cross the $30,000 threshold in 2012 but you haven’t yet registered for the GST/HST, you still can. Get to it before May in order to avoid the coming crackdown.
Registering is free, fast, and can be done over the phone. Call CRA’s business enquiries line at 1-800-959-5525 and press * to speak to an agent. The agent will guide you through the process and get you registered on the spot. Until the end of April, CRA’s hours are extended and live agents are available from 8:15 am to 8:00 pm local time on weekdays.
I was told by WSIB I had to register a business, although it wasn’t made clear what that meant. Turns out I was applying for a HST number, but I wasn’t making anywhere near 30k (and I still don’t). the CRA demanding payment for an arbitrary assessment, but I didn’t charge HST for that year.
Hi there. First, make sure you need to be a GST/HST registrant. It’s possible you need a business number (the first nine digits of your GST/HST number) but that you don’t actually need an associated GST/HST account.
If you can’t get out of being a GST/HST registrant, however, you need to file a GST/HST return because every GST/HST registrant is obliged to do so. And unfortunately, once you’re a registrant it doesn’t matter how little you make; if you bill anything through your business, you must charge GST/HST according to the rate used in the province where your customer resides and you MUST file a return. CRA uses arbitrary assessments when they don’t receive a return from you. You may be able to calculate a more favourable outcome (since you get to claim back any GST/HST you spent on business expenses) by preparing and filing a proper return, and your return will override the arbitrary assessment. Check out our Resources page to download an 8-page guide to the main details of how GST/HST works, or check out our blog posts on the subject.
Great tips, definitely helps! I was wondering what advice you have if I was charging HST to clients without knowing I had to register for a HST number. Do I just give it all back or do I inform the CRA somehow of the mistake?
You can’t just give the clients the HST back, unfortunately. Instead, you need to contact CRA, explain the error, and be prepared to produce invoices showing that you were charging HST. They’ll register you retroactively, you’ll complete a return and remit whatever you owe, and then you can decide whether to shut the account down or keep it and start filing and remitting as usual.
You can reach CRA’s business and HST services at 1-800-959-5525 (press * to speak to an agent). If you get a busy signal, just keep redialling until you get through.
We can help you with this if you like. Please contact the office using the contact form on this site and we’ll see what we can do.
Hello! As a new registered massage therapist, if I am an independant contractor working for a clinic, can I NOT register and let the clinic collect the HST and submit all HST for massage billings on my behalf?
Hi Cara. If you are doing work that is NOT considered a medical practice (which is exempt from GST/HST entirely), and you are an independent contractor, you MUST register for the GST/HST once you cross the small supplier threshold ($30,000 billed in any 12 month period).
Once you are registered, while the clinic may also be billing GST/HST and remitting it to the government, they also have to add GST/HST to what they pay you.
If you really hate the idea of being a GST/HST registrant and filing returns — which I get! — consider hiring a professional to do it for you. (Not to toot our own horn, but Personal Tax Advisors does your GST/HST alongside your personal income tax return at no extra charge.)
Then all you need to do is add GST/HST to your invoices and set the collected GST/HST aside for later.