As your business grows, the Canada Revenue Agency (CRA) may require changes in your tax reporting period. You should be aware of these GST/HST filing frequency thresholds.
Why You May Have to Change a GST Reporting Frequency
When starting your small business, you have an annual reporting period for GST/HST. If your business has annual taxable supplies, they increase as your business transactions increase. Your annual taxable supplies are probably the same as your sales over a rolling 12-month period.
The CRA rules may mean you must change your GST/HST reporting period to accommodate your increased sales and taxable supplies.
When Should You Change GST/HST Reporting Periods?
How do you know when you should change reporting periods?
- When your annual taxable supplies reach more than $1.5 million but less than $6 million, you must switch to quarterly GST reporting.
- When your annual taxable supplies exceed $6 million, you must change your GST reporting period to monthly reporting.
- The law also allows you to opt for a GST reporting period that’s shorter than your required reporting period.
For example, if you have annual sales of $1 million, you’ve got an annual GST reporting frequency by default. But, you can choose quarterly GST reporting. Why would you?
Shorter GST/HST reporting periods could
- Help you manage your cash flow, and
- Avoid making one large annual payment.
Shorter reporting periods are a good idea if you receive refunds often, because you can cash them in quicker. You might be in this situation if you’re an exporter with multiple zero-rated supplies.
How to Change Your GST/HST Reporting Period
Changing GST filing frequency is a straightforward process. You need
- Your tax numbers,
- Your current reporting period, and
- Your estimated annual taxable supplies.
You have options when changing GST filing frequency.
It’s easy to change your reporting online on the CRA website.You can make your request electronically using the “File an Election” service in My Business Account or Represent a Client. Another option is using Form GST20. CRA’s web content is accessible, and the agency provides the form in alternative formats, including digital audio, electronic text, Braille, and large print. So if you have a disability, you have access to the information and materials you need.
It’s exciting when CRA requires you to change your GST/HST reporting period, because it signals business growth. QuickBooks Online can help you maximize your tax deductions.