5 Reasons to Change Your GST/HST/QST Reporting Period and How to Do It
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. Many new business owners are quite enthusiastic and/or orderly and therefore would prefer to file their reports and pay the balance owing on a more regular basis. Conversely owners might be concentrating on the other aspects of running their business and do not want to be bothered with the administrative hassle of regular monthly or quarterly reporting. In this case, you might select the annual reporting option to make the year end reporting requirements as simple as possible. As time passes and your business evolves, you might realize that the option that you initially selected may no longer be the most optimal.
reasons to change your gst/hst and qst reporting period
Sales have exceeded the GST/HST and QST threshold amount for the reporting period that you selected. The filing frequency is as follows
If annual taxable sales exceed $6,000,000 annually, then the business is required to report monthly.
If annual taxable sales exceed $1,500,000 but are less than $6,000,000 annually, then the business may report either monthly or quarterly
If annual taxable sales are less than $1,500,000 annually, the the business may choose to report monthly, quarterly OR annually
If you have exceeded the sales threshold, your filing frequency will automatically be updated by CRA or RQ and you will be notified by mail. However businesses do have a choice if sales are less than $6 million and therefore might want to change it.
Similarly if sales have decreased since you selected your reporting period you might reduce the filing frequency.
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. Or if your accountant files your sales tax report for you, you can save fees by doing it just once a year.
Manage cash flow better. If your taxable sales (typically) exceed your expenses , you will owe money to CRA or RQ. 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 -either quarterly or monthly. Alternatively, the GST-QST collected can be put into a separate savings account to ensure they are available when it it is time to pay.
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
In order to change your reporting period that is not changed automatically by CRA or RQ as a result of an increase in sales threshold (see above) you will have to submit an election which is Form GST20 if you are registered for GST/HST and Form FP2620V if you are registered in Quebec for GST/HST and QST (all of which are administered by Revenue Quebec in Quebec)
If you are changing your reporting period from quarterly to annual, the election must be made within 3 months of the year end date for which you are filing the election. For example if you have a December 31st, 2020 year end, then the election to change your filing period for 2021 from quarterly to annual must be made by March 31, 2021.
In all other cases, the election must be filed within two months of the date from which the election is expected to take effect.
You can also change your reporting period for your GST/HST return using the "File an election" online service at CRA My Business Account , in which case the form does not need to be completed. While filing online for those businesses that are registered in Quebec is not available online, you can check the status of any previous elections by logging into RQ My Business Account/consumptions taxes/view GST/HST and QST elections
Business that file their GST/HST and QST annually might also be required to pay quarterly instalments if their GST/HST and/or QST liability exceeds $3k per year.
Below are links to the forms that need to be completed
CRA Election to Change the GST/HST reporting period
RQ Election to change the GST/HST and QST reporting period (if you’re business is resident or registered in Quebec)
Are you a small business owner or freelancer looking to better understand your small business/self employed taxes and how to prepare your tax returns?. Check out our small business tax guide which explores complex tax concepts in an easy to understand way and gives you the knowledge to prepare your taxes with confidence
UPDATED FOR 2024
Mastering Canadian taxes as a small business or self-employed owner can often feel complex and overwhelming. Simple errors, oversights, and miscalculations can result in paying a higher tax bill than is necessary and result in costly audits and/or penalties.
But keeping your business on the right side of the tax authorities is easier than you think. Small Business Tax Facts: An Easy-to-Understand Guide for Canadian Small Business Owners teaches you the fundamentals and the facts about income and tax. It shows you how to navigate taxes, pay only what you owe, and on time, and save your hard earned money by claiming the deductions that you are entitled to.
Inside this comprehensive and helpful guide for unincorporated small business and self employed owners, you’ll discover:
a comprehensive breakdown of business expenses and deductions with examples to help you maximize your tax savings
detailed explanation of income tax implications for small business and self-employed individuals
expert guidance on how tax brackets and rates work so that you can understand exactly how you are taxed
the differences between being an employee and a small business/self employed owner allowing you to make informed decisions about your tax obligations
how to register for an online CRA Account to simplify your tax reporting and compliance
a list of the most common tax deductions and tax credits to help you reduce your tax bill
insights into how small business/self employed owners should do their accounting to simplify the tax preparation process
guidance on how to prepare and file your own business income tax return, allowing you to save on hiring an accountant
insights on sales taxes, including how to prepare your sales tax (GST/HST) returns accurately.
how Canada Pension Plan (CPP) contributions work ,how to calculate them and how they affect your taxes payable
and so much more!
Discover insider secrets, tools, techniques, and must-know information from author Ronika Khanna CPA, CA, & CFA, and learn to navigate your Canadian small business taxes with ease.
Get your free small business tax return checklist .