Transcript

Host: Welcome to the segment called Avoiding common reporting errors, part of the CRA’s GST/HST Information for a New Small Business video.

With me is Sarah Taylor.

Welcome Sarah.

Subject matter expert: Thank you Kathleen.

Host: What are some of the more common reporting errors that new small businesses should be aware of, in relation to the GST/HST?

Subject matter expert: One common error involves reporting periods.

The CRA assigns reporting periods based on the revenue from your total taxable supplies of property and services made in Canada, as well as those of your associates in your previous reporting periods, or on an estimate of future revenues, which you would have given when you registered for GST/HST.

For each reporting period, you have to prepare and send a GST/HST return to the CRA, showing the amount of the GST/HST you charged or collected from your customers and the amount of input tax credits you are claiming.

Sometimes an error happens when a business’s records show their reporting period dates differ from what the CRA’s records have.

Host: Can you give me an example?

Subject matter expert: Certainly; a new business registers for the GST/HST on May 14th this year as an annual filer, with a December 31st year end.

When they file their annual return to the CRA, they adjust the date of the reporting period to May 1st, in error.

This quick notification is a good reason to consider always filing your GST/HST return using NETFILE. If the return was filed through the GST/HST NETFILE service, you would be immediately notified of this error. The return would not be accepted, because the reporting period start date did not match what the CRA had on record.

Host: What’s another common error to avoid?

Subject matter expert: Another common error involves reporting input tax credits or ITCs on the wrong line of the return.

ITCs reduce the amount of the GST/HST payable in the net tax calculation.

On the GST/HST return, the ITC calculation, along with relevant adjustments, is completed on lines 106 through 108.

Sometimes, in error, registrants put the information on line 111, which is only for rebates.

To avoid this error, read the sections of the return carefully, and include figures in the correct boxes.

Host: Who would use the rebate section of the GST/HST return?

Subject matter expert: Certain charities and public service bodies may use line 111, but the details of claiming these rebates are beyond the scope of this video.

Host: What if I make a mathematical or transcription error when preparing my return?

Subject matter expert: When registrants are in a hurry to file their return, and pay an amount owing, they may make mathematical or transcription errors.

The CRA may send a notice of assessment to show the difference between what was filed as owing and what was paid.

Another great reason to use GST/HST NETFILE, the service will calculate for you. As long as the numbers you enter are correct, the net tax calculation will be correct.

Host: I found out that I made a mistake on my GST/HST return, how can I correct it?

Subject matter expert: If you need to make a change to any return you have sent to the CRA, do not file another return.

If you receive a notice from the CRA, or you notice that you made a mistake on your return, you would need to make a correction.

First, if you forgot to include an amount in your ITCs, simply add the missed amount on line 106 of your next GST/HST return. In most cases, you have up to four years to claim your ITCs.

For more information, go to the CRA webpage on Time limits for claiming ITCs. The link is included in the Related links for this segment.

The fastest and most convenient way to make changes to your GST/HST return is with My Business Account.

For more information, go to the CRA’s webpage at www.cra.gc.ca/mybusinessaccount. The link is included in the Related links for this segment.

Host: Are there other ways to adjust a return without using My Business Account?

Subject matter expert: Yes. If you don’t use My Business Account, you can send a letter to your tax centre giving your business number, the GST/HST reporting period to be amended, and the corrected amounts by line number from the GST/HST return that you want to correct.

You can request the adjustment yourself or have an authorized representative do so on your behalf.

If you send a letter, make sure it has been signed and includes the name and telephone number of a person the CRA can contact.

Host: What’s a good resource to help with filing GST/HST returns and for making any necessary adjustments?

Subject matter expert: For more information and line by line instructions for completing your GST/HST return, go to publication RC4022, General Information for GST/HST Registrants. The link is included in the Related links for this segment.

Host: Thank you Sarah.

This concludes the segment called Avoiding common reporting errors, part of the CRA’s GST/HST Information for A New Small Business video.

Thank you for watching.