How HST (Harmonized Sales Tax) works if you’re self-employed
Understanding freelance taxes in Canada isn’t always easy. If you are self-employed and registered for GST/HST, keeping track of payment and filing due dates can be overwhelming. Moreover, late or missed deadlines can result in additional interest and penalties assessed by CRA.
We can help you stay Sorted with the following guide to sales tax in Canada:
How often are you required to file GST/HST returns?
If your total revenue from self-employment is under $1.5 million, Canada Revenue Agency will assign you an annual reporting period for GST/HST.
However, you have an option to file your GST/HST returns more frequently (i.e. Quarterly or Monthly). To file your GST/HST returns quarterly or monthly , you need to file Form GST20, Election for GST/HST Reporting Period with CRA.
What are the GST/HST Tax Return filing and payment due dates?
- GST/HST Return Filing date refers to the date by which you need to submit your GST/HST Tax Return.
- Payment due date means you must remit any taxes owing to the CRA by a particular date.
The GST/HST return filing and payment due dates differ depending on whether you are annual, quarterly or monthly filer. See table below for details:
|GST/HST Due Dates – Self Employed Individuals|
|Type of GST/HST Filer||Tax Payment due date||Tax Return Filing due date||Examples|
|Reporting Period||Tax Payment due date||Tax Return Filing due date|
|Annual||Apr 30th||Jun 15th||Jan 1, 2018 To Dec 31, 2018||April 30, 2019||Jun 15, 2019|
|Quarterly||One month after the end of the reporting period||One month after the end of the reporting period||Jan 1, 2019 To Mar 31, 2019||April 30, 2019||April 30, 2019|
|Monthly||One month after the end of the reporting period||One month after the end of the reporting period||Mar 1, 2019 To Mar 31, 2019||April 30, 2019||April 30, 2019|
Do I need to pay GST/HST instrumentals?
If you’re an annual GST/HST filer and your net GST/HST owing for a fiscal year is $3,000 or more, you are required to make quarterly instalment payments in following fiscal year. It’s a good idea to ask your tax professional whether or not you need to pay instalments.
GST/HST instalment payments are due within one month after the end of each calendar quarter.
How much do I need to pay in GST/HST instalments?
You can calculate the amount of instalment payments based on the previous year’s net tax owing or current year estimated net tax owing.
For example: Your net tax for the 2018 fiscal year was $4,000. CRA will calculate your quarterly instalments at $1,000 each ($4,000 ÷ 4). However, if you estimate that your net tax for 2019 will be $3,200, you can choose to base your instalments on your estimate for 2019 and can make quarterly payments of $800 ($3,200 ÷ 4).
Note that if you are a new registrant and your first year of filing is less than a full year, you need to estimate what your net tax will be for the next fiscal year. You can do this by prorating your net tax from your short fiscal year. If the estimated amount is $3,000 or more, you may have to make quarterly instalment payments.
If you are registered for Quebec Sales Taxes (i.e. QST), Revenue Quebec follows the same guidelines as above for QST.
If you are registered for Provincial sales tax (i.e. PST) in British Columbia, Manitoba or Saskatchewan, you will need to know your PST filing frequency and due dates.
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Nikhil Aggarwal is a CPA, CGA and a Tax expert. He strongly believes in transforming obstacles into opportunities and loves working with businesses, entrepreneurs and individuals. He has over 10 years of experience in accounting, taxation and technology. He has a proven track record of delighting the clients by finding over $20 million in tax savings. Nikhil has also completed Canadian In-depth Tax Course, which is the most comprehensive tax training program in Canada.