What if you collected HST and never remitted it?

HST you added to an invoice is not your income. It is net tax held for the Crown. If you collected it and never filed the return or sent the money, the late-filing penalty is 1% of the amount owing plus 0.25% for each complete month the return is late, up to 12 months. Interest is charged on top, at the prescribed rate, compounded daily. If the return would have been nil, that particular penalty is generally nil, but the return is still late.

This is different from income tax you forgot to file. CRA treats unremitted GST/HST as trust funds. A director of a corporation can be personally assessed for net tax the company did not remit, under section 323 of the Excise Tax Act. There is a due-diligence defence, and the assessment generally has to be made within two years after the person stops being a director. That is a real exposure. It is not a slogan.

What not to do first

Do not phone CRA to confess the balance before you know whether a voluntary disclosure is still available. A disclosure has to be voluntary. Once CRA has contacted you about that HST, the disclosure window on that issue is usually closed. A disclosure also has to be complete, a penalty has to be the thing at risk, and the tax has to be paid or a payment arrangement accepted. It is not a form letter for every late filer, and acceptance is not promised.

Do register the facts you actually have: the date you started charging HST, the reporting period, the sales you charged tax on, and the input tax credits you can still support. Guessing a round number and hoping is how these files get worse.

• Penalty shape: 1% of net tax owing, plus 0.25% per complete month, maximum 12 months.
• A nil return is still a return. The penalty is about the amount owing, not about silence.
• Input tax credits have a time limit, often four years for many small businesses and sometimes two. Old receipts do not all survive.
• Personal spending of collected HST does not change the remittance.

How the catch-up is priced

A sole proprietor who also needs the personal return has two layers: the HST returns, and the T1 with a T2125. A ready self-employed year at Tax Everyday is $650 plus HST. Several years of unfiled HST, or a year where the books were never totalled, is quoted after we see the periods. A corporation with unfiled GST34s sits with the corporate package when that year is ready: $2,000 plus HST, covering the T2, statements, and HST support.

Bring the sales list, the HST you actually charged, and the expense receipts you still have. We will tell you the years and the fee before anything is sent to CRA.