Tax Question:
When are my Harmonized Sales Tax (HST) filings and payments due and what are the penalties and interest for being late or failing to file?
Facts:
Your annual sales determine how many times a year you have to file HST returns and pay the tax. If you are late in filing your return or making payments, it could result in penalties and interest being charged.
How many times a year you file an HST return (reporting period) is based on your annual sales.
These reporting periods are assigned to you; however, you can request more frequent filing with the Canada Revenue Agency (CRA) if you choose. You cannot request less frequent filing. If you are an annual filer, your HST return and the top-up amount owing are usually due no later than three months after the end of the fiscal year. You may be required to make quarterly instalment payments if your net tax for a fiscal year is $3,000 or more. Instalment payments are due during the year and within one month after the end of each of your fiscal quarters. If you are a monthly or quarterly filer, your HST return and the amount owing are due no later than one month after the end of your reporting quarter. When a due date falls on a Saturday, a Sunday or a public holiday, CRA will consider your filing/payment to be on time if they receive it on the next business day.
HST return’s not filed on time result in a penalty calculated as 1% of the amount owing plus 25% of 1% of the amount owing for each month the return is late. There is also a penalty of $250 if you receive a demand to file a notice and do not file. If you are required to file electronically instead of paper file, there is another penalty of $100 for not electronically filing the initial return plus $250 for each subsequent return not electronically filed. The interest rate charged on amounts owing is equal to the basic rate plus 4%. The basic rate is based on the rate charged on 90 day Treasury Bills, adjusted quarterly. Interest is charged on overdue balances owing and on late or insufficient instalment payments.
Please note that all HST interest and penalties paid or payable cannot be claimed as an income tax deduction.
If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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