HST

Preparing the Return – The Quick Method

You must file an election with CRA in order to use this method. This method is available for businesses with annual sales less than $400,000.

Quick method users keep a portion of the HST charged to their customers but do not claim input tax credits (ITCs) on their expenses (except for capital assets purchases eg. furniture, computers, equipment).

Complete the HST form as follows:

• Line 101 – sales for the quarter, excluding HST —based on invoices prepared, even if not paid
• Line 105 – HST charged to customers—based on invoices prepared [even if not paid] LESS HST you are allowed to keep (see below for calculation)
• Line 108 – HST paid on capital purchases (computers, equipment, furniture)
• Line 109 – Line 105 minus line 108. If the amount is negative, write a – sign in the box beside line 109
• Line 114—If line 109 is negative (i.e. refund), enter it again here.
• Line 115—If line 109 is positive, enter it again here.

Calculating the HST you are allowed to keep: If you charged HST @ 13% on all invoices, multiply the HST charged by 24%. Ontario companies that charged only 5% GST (eg. sales to Quebec) can keep 62% of the GST charged to those customers. Ontario companies that charged 15% HST can keep 20% of that HST charged. In the period your annual sales exceed $30,000, add an additional $300 (once per year).

Preparing the Return – The Regular Method

Complete the HST form as follows:

• Line 101 – sales for the quarter, excluding HST —based on invoices prepared, even if not paid
• Line 105 – HST charged to customers—based on invoices prepared [even if not paid]
• Line 108 – HST paid (expenses, computers, equipment, furniture)
• Line 109 – Line 105 minus line 108. If the amount is negative, write a – sign in the box beside line 109
• Line 114—If line 109 is negative (i.e. refund), enter it again here.
• Line 115—If line 109 is positive, enter it again here.

Filing the Return

Returns with a negative or zero balance can be Netfiled if there is an access code printed on your return.

Returns with a balance owing can be filed and paid via your bank’s online government tax & filing system.
…Select payment type GST34 to file and pay your return.
…Select payment type GST-P if the return has already been filed and you are just making a payment.
……File 1 day before the deadline as your bank’s system will use tomorrow’s date as the filing date.

If mailing, send a cheque along with Part 2 of the original CRA return to:
CRA, PO Box 3800 STN A, Sudbury, ON  P3A 0C3.

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HST Rules & Rates

Companies charge HST on most products and services sold in Canada. Returns are normally filed quarterly. The return is due 30 days after the quarter end date.

The tax that you charge depends on the province where your customer is located.
For retail operations, the customer is located where the store is located, unless you ship the goods to the customer.
Customers located outside of Canada are not charged HST.

Ontario – 13%
Quebec – 5%

Alberta – 5%
British Columbia – 5%
Manitoba – 5%
New Brunswick – 15%
Newfoundland – 15%
Nova Scotia – 15%
PEI – 15%
Saskatchewan – 5%

The detailed rules can be found below – see link for CRA place of supply rules.

If your company is located in Quebec:
Charge 5% GST & 9.975% TVQ to customers located in Quebec
Charge 13% HST to customers located in Ontario
If your supplier is located in Quebec, you will be charged GST & TVQ
If your supplier is located outside of Quebec, you will be charged GST only

Historical Rates
13% – July 1, 2010 (Ontario)
5% – January 1, 2008 to June 30, 2010
6% – July 1, 2006 to December 31, 2007
7% – January 1, 1991 to June 30, 2006

Frequently Asked Question

Q. I am using the HST regular method and forgot to claim the HST on a purchase, what do I do?

A. Add the amount to line 108 of your next HST return. You have up to four years to claim input tax credits.