How to Get Your GST/HST Refund?

Brian Jang ON October 16, 2018

If you are a business owner, you may be wondering if there is a way to claim back the GST/ HST that you have paid out. We’ll look at the answer to that here.

Your Small Business and Input Tax Credits

As the owner of a Canadian business registered for the GST/ HST, you are able to make use of Input Tax Credits on your return in order to get back the GST/ HST you’ve paid out over the course of a given reporting period.

In order to do this, when you complete your GST/ HST return, you will declare the amount of GST/ HST that you have collected from customers and then deduct your Input Tax Credits. The net result, if negative, means you will receive a GST/ HST refund.

As is the general rule, you must be in possession of your receipts in order to support your claims, and the amount that you submit as Input Tax Credits must be related to your commercial activities; if 60% of a given receipt is related to personal use, then you may only claim 40% of the total.

Keep all of your receipts that support your claim; the CRA can choose to audit your return up to 4 years following submission.

What is the Time Limit to Make an Input Tax Credit Claim?

It is expected that you will make the Input Tax Credit claim during the same period in which you made your purchases, but if you somehow failed to make the claim, or even simply forgot, you are able to claim it in a later reporting period.

In such an event, you do still have a time limit of four years from the end of the reporting period from which it originates, unless your revenues exceeded 6 million dollars in each of the last two fiscal years. If that is the case, your time limit to file is two years from the period from which the claim originated.

The Quick Method

There is a Quick Method of accounting available to businesses that normally do not qualify for the GST/ HST refund (IE the total GST/ HST collected is greater than what you pay for supplies). This method, designed to reduce paperwork and accounting for small businesses allows you to pay a reduced portion of the GST/ HST collected by you, following a formula in place of claiming Input Tax Credits on most of your purchases, paying the difference between what you collect and what you pay. The quick method can be beneficial to certain types of businesses with few taxable expenses (graphic artists, writers, etc.)

Qualifying for the Quick Method

There are certain requirements that must be met to qualify:

You must have been in business for a period of 356 days prior to the start of the reporting period
Your annual revenue must be $400,000 or less (including GST/ HST) for the first four or final four of five fiscal quarters
Your business must not provide any of the following services: legal, financial consulting, accounting, bookkeeping, tax preparation or consulting services

Keep in mind that despite not having to actually state the amount of GST/ HST collected or paid on your return when using the quick method, you are still required to keep your records for 6 years following the year in question for the purpose of any potential CRA audit.

Need help claiming back your GST? Contact BCJ Group today!