GST/HST registrants who file returns only once a year are sometimes surprised to learn that the Canada Revenue Agency (CRA) is expecting quarterly GST / HST instalment payments through the year. They don’t know…because CRA doesn’t tell them until it’s too late.
Not every registrant has to pay quarterly. If your GST/HST remittance is under $3,000 for the year, you can pay the entire bill once a year when you file your GST/HST return. But if you are an annual filer and your net tax for a fiscal year exceeds $3,000 or more for two out of three consecutive years, you are obliged to pay by instalments or else pay interest for ‘missed’ payments.
How Much Do You Have To Pay?
Expected instalments are typically based on the prior-year’s GST/HST remittance, divided into four equal payments. For example, if you remitted $3,900 in total GST/HST one year, your instalment payments the next year would usually be set at $975 each.
When Do You Have To Pay GST / HST Instalments?
Instalments are due within one month of the end of each fiscal quarter. For a business with a December 31 year end, this would mean that instalments are due April 30, July 31, October 31, and January 31.
If you don’t pay the required instalment by the due date, you may be charged interest on the missed payment(s) after you file your next GST/HST return. At the time of writing, CRA’s interest charge is 5% p.a.
How Do You Pay Instalments?
You can pay your instalment directly at your financial institution or use CRA’s online payment services. If you’d prefer to pay by cheque – in fact, any time you want to send CRA a cheque — you need to enclose a remittance voucher. A remittance voucher is a slip that tells CRA’s computers what account and type of payment your instalment is for. Without a voucher your payment may go astray. Vouchers can’t be downloaded (they’re printed with special magnetic ink) so you need to order remittance vouchers from CRA here.
To learn more, visit CRA’s page on instalments for GST and HST accounts.