The GST/HST I collect isn’t mine. How do I stop spending it?
GST/HST you collect belongs to the CRA until you remit it. Move it into a separate account every time a customer pays, so your balance shows only what is actually yours. You must register once your taxable sales pass $30,000 over four consecutive calendar quarters, and your filing period, monthly, quarterly or yearly, depends on your sales.
Why a good balance can mislead you
Every invoice with GST/HST on it puts money in your account that belongs to the CRA. After a busy season the balance looks strong, and part of it is owed. Spending it feels fine until the return is due.
A separate account, every time
Move the tax you collected into a second account whenever you are paid. Your main balance then shows the money you can actually use, and filing day stops being a scramble.
Claim your input tax credits
The GST/HST you pay on business purchases usually comes back to you as input tax credits, which reduce what you owe. Keep your receipts so you can claim them.
If you have already spent it
Contact the CRA before the deadline, not after. Payment arrangements are possible, and penalties and interest grow the longer it waits.
Also asked
- When do I have to register for GST/HST?
- Once your taxable sales pass $30,000 in a single calendar quarter or over four consecutive quarters. You can register voluntarily before that. Check canada.ca for the current rules.
- How often do I file?
- Monthly, quarterly or yearly, depending mainly on your annual sales. The CRA assigns your period, and you can sometimes choose a more frequent one.
- Is GST/HST an expense for my business?
- Generally no. You collect it for the government and pass it on, which is exactly why it should not sit in the account you spend from.
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