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.
If this sounds like you, contact us to learn how we can help you get on CRA’s good side again.
I charged the HST, to the tune of around $10K, and I terribly mismanaged the money. I’m worried I won’t be able to afford to live now with how much they might come after me for. Is there a way to set up a payment plan with the CRA that allows me to still be about to afford my day to day life? Please help, I’ I’ve been avoiding it because I’m so full of anxiety from this.
Hi Gordon. Don’t be anxious, I have good news! YES, you have a bunch of options here, and you WILL be able to survive. First off, make sure you’ve filed your GST/HST return(s) so you know what your actual amount owing is; and make sure you have properly claimed your input tax credits to bring that bill down as far as possible.
Once you know your amount owing you can choose to pay it as gradually as you like. If CRA is satisfied that you’ll eventually pay it off, they won’t even contact you.
Now if they do start to worry about getting the full amount, you’ll be contacted by an agent from CRA. You can request a payment plan and they will usually propose that you pay six equal monthly payments over six months to settle your account.
If that is still more than you can handle, there’s a process called an appeal under Taxpayer Fairness. One of the goals of Taxpayer Fairness is that paying down your tax bill shouldn’t prevent you from surviving. You fill out a form to make the application, and CRA will require an accounting showing your monthly income and your monthly survival expenses, to determine a repayment rate that is suitable for you.
It seems cumbersome and invasive because it kind of is. But CRA has to function according to strict rules that apply to everyone, and they have a process for everything. This is the process for arranging a payment plan you can afford.
If there’s nothing you can afford…there are still some steps you can take. But just based on your question I can tell this is causing you a lot of pain, and I suspect that the actual situation may not be as bad as you think. If you’re feeling overwhelmed, consider dropping us a line to set up a free consultation. We can see where you’re at and give you some recommendations based on your specific situation.
I applied to the voluntary disclosure program back in 2018 and hired a tax lawyer and a chartered accountant to help me handle it. I work as a independent sales rep representing a US based company in Canada. The years filed were 2011-2018. It took a while to be processed but eventually I was asked to pay 63,800 on my income tax, which included some interest. In addition, I was assessed to owe 165,000 in GST/HST even though I did not bill my Client in USA anything.
[Note: Site owner has edited this comment for clarity, and deleted some details for the sake of the commenter’s privacy.]
I really don’t know how to express this but l’ll do my best. One day shortly after the date of Jan. 5/23 l received itemized GST statements in 3 pages.
[remainder of message deleted by blog owner for privacy]
Check your email — we have contacted you directly.