Do you have to make GST/HST instalments?

If you are an annual filer and your net tax for a fiscal year is $3,000 or more, you may have to make quarterly instalment payments throughout the following fiscal year. Instalments are periodic payments that GST/HST registrants have to send the CRA towards the net tax owing on their annual GST/HST return.

Failing to make instalment payments could result in interest charges. And that’s exactly what thousands of Canadian small business owners face every year. These interest charges can be significant, and are presently calculated based on a 5% annual interest rate. And to add insult to injury you cannot claim an income tax deduction for arrears interest paid or payable for outstanding GST/HST amounts.

Instalment payments are due within one month after the end of each of your fiscal quarters. So, for example, if your fiscal year end is December 31, your instalments due dates are: April 30, July 31, October 31 and January31.

When you file your GST/HST return for the fiscal year, report the instalment payments you made throughout the year on line 110 of your GST/HST return. In case the instalments you paid are more than your net tax, you can claim the difference as a GST/HST refund.

If you are not sure whether you have to make instalment payments you can sign up for the CRA’s service called “My business account” on their website, and calculate your instalment payments online.

Another option would be to call the CRA’s business phone line 1-800-959-5525 (press * after you get an auto response), and ask them a question regarding instalments.

Last but not least: for income taxes the CRA will let you know when they want you to start paying instalments. This is NOT the case with GST/HST instalments: you have to figure it out yourself…or pay interest every year, your choice.