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What is the GST Refund?

The general sales tax (GST) refund refers to several GST credits or rebates. You don’t want to miss out on getting yours if you’re eligible, so you should learn more about them.

What is the GST/HST Credit?

The GST/HST credit is a quarterly payment for Canadians who earn less than the GST credit income threshold. If you’re a sole proprietor, partner, or self-employed individual, you report your business earnings as income on your T1 general income tax return. Based on that information, the Canada Revenue Agency (CRA) determines whether you qualify for the GST credit. You have to file a tax return to receive the credit. The CRA gives you up to three years to request a retroactive payment. Full details on current rules and payment amounts are on the CRA website.

When Can You Expect a GST Refund?

The Canada Revenue Agency issues goods and services tax credits on July 5, October 5, January 5 and April 5 of each tax year. GST rebate payment is either by cheque or direct deposit.

The GST credits are issued to offset the GST paid by certain residents of Canada. When you file your income tax return, the CRA determines whether you’re eligible for GST credits based on your income. You also need to be at least 19 years old to be eligible.

If you’re a new resident of Canada, you can download and complete Form RC151 from the CRA website to apply for GST credit for the year when you became a resident.

Claiming a GST Input Credit

As a small business owner, you may qualify for a GST input tax credit (ITC). This credit is for GST/HST you pay on business expenses. If you’re claiming this input credit, you must charge GST/HST on your goods or services and have a GST/HST account with the CRA. When you incur reasonable expenses or make purchases for using, consuming, or supplying needs related to your commercial business activities, those costs may qualify for credit.

Your receipts and invoices need to contain certain information to support your claim, and the type of information varies depending on how much you spend. The CRA website lists the information about the invoices and receipts you need, and how to apply for your input credit on your GST/HST return. Most GST/HST registrants have four years to claim ITCs. If your sales are under $6 million annually, you’re in that category. Some businesses with more than $6 million in sales have two years to file claims.

If you’re unsure how much ITC you can claim, the ITC calculator can give you a better idea. Report the ITC figure, and any other ITCs you can claim, on line 108 (or line 106 for paper) on your GST/HST return.

GST Rebates for Errors and Other Situations

A GST rebate refers to a refund of GST or HST you paid in error or GST you incur in other situations. And the CRA doesn’t require you to register for the GST/HST to get some of these refunds. For example, if you pay the GST/HST on a non-taxable item by mistake, you should make a GST refund claim, because you’re eligible for a refund. The CRA’s website provides a list of reasons for claiming refunds and how to claim GST refunds.

Another way to receive a refund is as a member of a Royal Canadian Legion group. You may claim a full Legion refund of GST/HST that the group pays commemorative poppies, poppy pins, and wreaths. It’s a rebate the government started in 2010.

It’s good to know the government helps you get your money back in the form of rebates and credits. Because when you’re in business, every dollar counts. How do you track what you’re paying out and taking in? Over 5.6 million customers use QuickBooks. Join them today to help your business thrive for free.

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