When starting a business the selection of the GST/HST or QST reporting period i.e. how often to file your sales tax returns is often based on new business considerations. Either you are over enthusiastic and you want to file frequently or you don’t want to be bothered with the administrative hassle and select the annual reporting option. As time passes and your business evolves, you might realize that the option that you initially selected may no longer be the most optimal. There are several reasons that you might want change your reporting period:
- Sales have exceeded the GST/QST threshold amount for the reporting period that you selected
- Sales have decreased since you selected your reporting period
- Reduce administration time and costs. Eg if you compile your accounting once a year, but your sales tax reporting is quarterly, it could be more advantageous to file annually.
- Manage cash flow better. If your taxable sales (typically) exceed your expenses , you will owe money to the CRA. This can add up and result in a significant liability over time, which many business owners have difficulty paying. To ensure cash flow discipline, it might make more sense to report and remit more frequently.
- Recover input tax credits sooner. Businesses whose taxable sales are lower than their taxable expenses are eligible for either a GST/HST or QST refund. Business owners, who want to receive these refunds as soon as possible as a source of cash flow, might want to increase the frequency of their filings.
How to Change GST/HST and QST Reporting Periods
Note that you can only change the reporting period at the beginning of your fiscal year as the reporting periods must correspond with your fiscal year. With a couple of exceptions, the forms below are due two months after the end of your fiscal year.
If you are registered for GST-HST, you will have to fill out the Election for GST/HST reporting period
If you are registered for GST-QST, you will have to fill out the FP-620-V Election Respecting the GST/QST reporting period
- GST Considerations for New Business Owners
- Alternative (Quick) Method of Reporting GST/HST and QST
- Interest and Penalties for Late GST/HST Returns