Listing the Penalties for Filing Late GST/HST:

Late GST/HST taxes are fees and interest that businesses in Canada must pay.

March 23, 2022

Do you have a thorough understanding of how to deal with the tax procedure in your business? How to calculate accurate GST/HST amount and when to submit it to the CRA? We understand that this procedure can be tough to navigate, and you may require assistance to ensure that you do not suffer any penalties or tax burdens. So don't be concerned! Yogi & Associates is here to support and guide you when it's time to submit the GST/HST to the CRA, and we'll even help you calculate the amounts, so you don't make any mistakes. So don't hesitate to contact Yogi & Associates; we will help you understand how late-filing penalties for GST/HST operate so you don't end up with even more significant tax bills than usual.

Why Is It Essential To Return GST/HST?

You must know that you are supposed to charge GST/HST from customers in exchange for goods and services. After collecting GST/HST from customers, you must hold GST/HST in trust for the Canadian Government. Taxpayers who have yearly revenues of more than $30,000 must register for a GST/HST number, collect GST/HST from their customers, file GST/HST regular returns with the Canada Revenue Agency. After collecting GST/HST, refund the GST/HST they have held in the trust to the CRA. But if you fail to submit the taxes on time or the appropriate amount, it can lead to a massive burden of penalties and interest on your business by the CRA. The longer you owe a balance, the higher the penalties get. 

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If you want to read more about returning GST/HST to the CRA, you can see this article by clicking The Legal Guide: GST/HST Return

Penalties for Filing Late GST/HST:

Let's discuss the penalties according to the following situations. 

  1. Fail to File for GST/HST
  2. Demand to file
  3. File to submit electronically
  4. Fail to file correct information

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"Make sure you pay your taxes; otherwise, you can get in a lot of trouble."–Richard M. Nixon.

1. Fail To File For GST/HST:

If you fail to submit your GST/HST or if you are filing late, i-e; after the required time to indulge, CRA will charge your company with a penalty which is:

For example; suppose your company owes $30,000 in GST/HST, and you are eight months late in submitting the amount you would owe:

2. Demand to File:

If you fail to submit general sale tax when the CRA requests it, you will be charged a $250 penalty.

3. Failure to Submit Electronically:

If you fail to submit your GST/HST online for the first time, the CRA will penalize you $100, and if you fail to raise the taxes for the second time, the charges will escalate to $250.

4. Fail To File Correct Information:

CRA  will charge you the penalty of 5% amount plus 1% of the difference between what is reported and what should have been reported until the amounts are adjusted (to a max of 10%) if:

  • You fail to provide the information of amounts correctly, i-e, over/under-reporting of charges (over-reporting of loss and under-reporting of profits)
  • You fail to provide correct information of amounts by mistake.
  • You fail to provide accurate information.

Interest on Late Submission of GST/HST:

If you pay your GST/HST return late or partly, you will be assessed interest. There are two sorts of interest on GST/HST depending on the debt. Let's look at some scenarios in which interest must be paid.

  1. Arrears Interest
  2. Installment Interest

1. Arrears Interest:

If you fail to submit GST/HST to the receiver-general, CRA will charge you interest, calculated every three months using the prescribed daily compounded interest rate.

2. Installment Interest:

If you don't pay your installments by the due date, you'll be charged installment interest at the 90-day Treasury bill rate plus 4% until the entire amount plus interest is paid.

Refund Interest:

Charges are imposed on late or underpaid GST/HST returns and ongoing or past-due bills. Those who receive a refund or are paid more than their liability are eligible for a benefit. They will be refunded with interest.

CRA will pay you daily compounded interest on an overpayment or refund of net tax claimed on a GST/HST return starting 30 days after you make the refund claim on your tax return. Until the refund is received or applied, the interest receivable is calculated. Then, the interest rate is determined every three months using the prescribed daily compounded interest rate.

 

FOR YOU

Register your business in Canada today

GET STARTED

"All taxes discourage something. Why not discourage bad things like pollution rather than good things like working or investment?"–Lawrence Summers.

Wrapping it up!

Our team is familiar with CRA procedures and how to handle them successfully. It's crucial to understand that the CRA will never accept anything less than the total amount of the tax liability owed to it. However, the CRA will decrease or waive interest or penalty charges in some cases. If you cannot pay your tax burden in full, the CRA may agree to a payment plan. However, before engaging in negotiations with the CRA, it's essential to recognize the agency's power. So please don't hesitate to contact Yogi & Associates at our branch in Mississauga; we'll help you understand CRA interest and penalties and what it takes to decrease or eliminate them.

Rafia Khalil

Executive Journalist

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