Since all Canadians are familiar with paying tax on goods and services, we have come to understand this extra amount owed at a point of purchase as the ‘goods and services tax’, (GST), or the ‘harmonized sales tax’, (HST), or if you live in Quebec the QST. Additionally, if you are a business owner all of these bring additional meaning through the addition of further obligatory tax liabilities aimed at the business owner. A further explanation shares more insight as to what these taxes are.
What is HST and GST?
These are taxes that are applied to supplies of goods and services manufactured and offered in Ottawa and throughout the rest of Canada. Albeit, pretty much everyone pays this tax whenever they pay for a taxable good or service. The way this works is certain businesses have to ad the GST/HST to the price of the taxable service or the set of goods they sell.
Because registered Ottawa businesses charge this tax, they must report and file how much they have earned from the sales of the taxable items. The tax is then paid to CRA. In order for a business to register that have to meet certain criteria or have the ability to reach a particular threshold in sales of the taxable items.
Should Your Business Register for the GST/HST?
If you are self employed you are required to register. Once you do, you are obligated to collect and report your GST/HST earnings and pay them in the form of taxes owed, this applies to businesses that are considered small suppliers as well. For non-public entities, a small supplier will earn not greater than $30,000 on the sales of taxable goods or services. Furthermore, in certain instances non-residents conducting business in Ottawa or anywhere in Canada may have to register and follow the same procedures as a resident business.
If the foreign operated business in Ottawa fails to register liabilities could mount to the point of seizure of property and heavy fines. This same scenario can happen to Canadian owned companies that fail to collect and pay the GST/HST when the business clearly qualifies as a registrant. In either case the Canadian Government can freeze and seize all assets to settle the debt.
Payment Obligations and Due Dates
Accordingly, when and if you are ever confronted with this type of situation Income Tax Ottawa can help you. The best way to avoid this possibility is to have your taxes taken care of by a professional tax accountant. In a scenario where you suspect that you have made a mistake, it is advised to bring this to our attention so we can look further into how the return was calculated.
Penalties and Interest
Filing late brings an immediate penalty. An exception is if there is the existence of a zero-balance or a refund owed. The calculation of the penalty is at one percent of the owed plus a 1/4 of a percent owed multiplied by the number of months the filing is overdue, (a maximum of 12 months is the limit). Accordingly the penalties may reach a large amount of money.
For instance, take into consideration the varying reporting frequencies, the different thresholds for the sales of taxable items. In addition, there are the variable due dates. This is why it is important to have a certified professional accountant at Income Tax Ottawa help you deal with the GST/HST when it is time to report your earnings.