Q: Since I registered for the GST-HST I have still not earned over $30,000, so I haven’t charged GST-HST. Now the Canada Revenue Agency (CRA) has sent me a GST bill saying I owe them thousands of dollars in GST-HST, even though I haven’t earned enough income and I haven’t been charging GST-HST on what I bill. What do I do?
A: All is not lost! You can reduce or even eliminate that tax bill by filing your GST-HST return, even if you’ve never charged GST-HST.
The first thing to know is that you must bill GST-HST on all your self-employment income once you register. This is true even if after registration your revenue never reaches the $30,000 threshold. Similarly, you must file regular returns. If you have not done so since you registered, you probably will not be able to avoid doing some work to make it right.
At the same time, if the Canada Revenue Agency (CRA) has sent you a bill for GST-HST even though you’ve never filed a return, it’s very likely you can bring that tax bill down. But you need to take action.
What to do when you get a GST-HST bill
When Canada Revenue Agency (CRA) makes up a tax bill in the absence of a tax return, they’re doing something called a notional assessment (sometimes called an arbitrary assessment). Because they have no data (return) from you, they literally invent an amount for you to owe them, and they usually aim high. If you calculated your actual GST-HST bill based on your business revenue and expenses it would probably be much lower. The only way to override CRA’s made-up bill is to file a return to show the actual amount you owe.
Personal Tax Advisors specializes in bringing these bills down
We have worked with thousands of self-employed Canadians to bring their GST-HST accounts up-to-date. Even if you no longer have all your receipts, we can often create workable GST-HST returns based on your existing income tax filings. Sometimes this process actually improves your income tax return to reduce tax and obtain a retroactive refund.
Personal Tax Advisors has done this for countless clients who received terrifying bills from CRA regarding their GST-HST accounts.