GST/HST for Ottawa Small Businesses: What to Know
Registration, filing frequency, zero rated vs exempt sales, and what to do if you have fallen behind.
Do you actually need to register?
Generally, once your business's total taxable revenue passes $30,000 over four consecutive calendar quarters, you are required to register for GST/HST. Below that you are considered a small supplier and registration is optional.
Some businesses register before they have to anyway, usually because it lets them claim input tax credits on startup costs and equipment. Whether that makes sense depends on your specific numbers. Thresholds and rules can change, so this is a starting point, not a substitute for confirming your situation with us or the CRA.
How filing frequency actually works
The CRA assigns your filing frequency, annual, quarterly, or monthly, based mainly on your annual taxable revenue, with the option to file more often than required if you prefer. Higher revenue generally means more frequent filing. The specific revenue cutoffs are set by the CRA and are worth confirming for your exact situation rather than assuming from an old number online.
Whatever the frequency, the same rule applies: GST/HST registration, preparation, and filing is easiest when it is reconciled to books that are already current, not reconstructed from a shoebox once the deadline arrives.
Zero rated vs exempt: the mistake that keeps showing up
Zero rated sales are taxed at 0 percent. You still charge no GST/HST, but because the sale is technically taxable, you can claim input tax credits on the expenses behind it. Exempt sales are not taxable at all, and you generally cannot claim input tax credits on the related expenses. The two get mixed up constantly, and reporting one as the other on a return is one of the more common, and correctable, filing mistakes we see.
We have written before about a real client example where a zero rated sales reporting error was the exact issue that triggered a CRA review in the first place. It was fixable, but catching it before the CRA does is a lot less stressful than catching it after.
What actually triggers a CRA review
- Late or missing filings. The single most common trigger, and the easiest to avoid with a regular schedule.
- Zero rated or exempt sales reported incorrectly. A pattern the CRA's systems are built to flag.
- Input tax credits claimed without proper documentation. The credit itself may be legitimate, but the paperwork behind it needs to hold up.
- Numbers that do not match year over year without an obvious business reason.
If you have already fallen behind
It is fixable, and it is common. The order matters: clean up the bookkeeping and reconciliations first, then file the outstanding returns, then review past filings for the kind of classification errors above that can trigger a review on their own. Filing late returns on top of books that are not reconciled tends to just create a second problem on top of the first.
See also: how much does bookkeeping cost in Ottawa and sole proprietor vs incorporation.
Common Questions
Frequently asked questions
Not tax advice. This is general information. Your situation can differ. Ask us if you are unsure.
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