If you are running a business, small or large, you need to ensure you comply with all the tax reporting requirements. It can be difficult to properly file HST if you don’t have professional help. There have been changes in HST that you need to know in order to file accurately. Below are a few HST filing tips for 2018.
Keep Up To Date With The Requirements
To ensure you only pay what you’re required to and maximize on the available ITCs, you need to be aware of the latest rules and requirements when filing. You can recover taxes paid on certain purchases to the business. In fact, staying abreast of the tax rules can really help you to keep your tax bill on the lower side. The tax regulations may vary depending on how your business is structured. Ensure you take into account the rules that apply to your type of business when filing.
Maintain Proper Documentation
ITC and ITR claims are very important because they can reduce the amount of taxes you pay the CRA. However, if you don’t have adequate documentation, your claims may be denied. To avoid this, make sure you understand the stated requirements and follow them to the letter. For instance, you may be required to match the names of the invoices and contracts with the ones on the HST registrant claiming the credits. This is particularly important for businesses in the real estate industry where most invoices are in the name of the agent or the company’s representative.
Understand The Registration Requirements
If you want to supply products that are taxable anywhere in Canada, you must register for HST/QST and GST. This is especially important because it helps you to lower your tax bill by claiming ITCs and ITRs on the taxes you pay. Registering with HST will also avoid trouble with the Canada Revenue Agency. If you are not registered and you’re caught by CRA or Revenue Quebec making taxable supplies to customers, you may be found liable for thousands of dollars.
Intercompany Transactions
When you transact with another company, you can still charge and remit HST. However, there are rules that must be followed in order to avoid cash flow issues that could destabilize your business. Recently, a rule was passed by the CRA that required all businesses to file their election with the agency.
Know Your Business Structure
Is your business a partnership, joint venture or corporation? Knowing the proper structure of your business will ensure you pay the right amount of tax and properly fill the correct forms when filing. Joint ventures are particularly complex when filing HST. If you don’t apply rules that are designed for the structure of your business, you risk missing out on credits or face penalties that cost you a lot of money.
Most importantly dedicate time to perform annual checkups which ensure your business is tax compliant. This is especially critical if you’ve made changes in your business that affect operations or its structure.