What Are GST Tax Returns in Canada?
In simple terms, GST tax returns in Canada are the reports organizations submit to the Canada Revenue Agency (CRA) in order to report the amount of Goods and Services Tax (GST) that was collected and paid back.
GST in Canada is a 5% federal consumption tax applied to most goods and services. Businesses collect it from customers at the point of sale and remit it to the CRA. They can also claim input tax credits (ITCs) for GST paid on business expenses.
If your business earns over CAD 30,000 in taxable revenue over four consecutive quarters, GST/HST registration is mandatory. However, smaller businesses often register voluntarily to benefit from ITCs. Whether you’re a sole proprietor or corporation, filing GST returns is both a legal requirement and a smart financial move.
Canada GST Tax Rate
The current GST rate in Canada is 5% at the federal level. It is a value-added tax applied to the majority of goods and services sold in the nation. The tax is charged at each stage of the supply chain, from manufacturer to wholesaler to retailer, before the end consumer pays the tax.
Nonetheless, the tax rate isn’t simply a uniform 5% across the board. Canada has a unique sales tax system consisting of both federal and provincial sales taxes that vary across provinces and territories.
Some provinces have combined the provincial sales tax with GST to create a Harmonized Sales Tax (HST). For those provinces that do not use the HST, GST is taxed separately, and some provinces apply both the GST and Provincial Sales Tax (PST) separately.
| Province/Territory | Type of Tax | Total Sales Tax Rate | Breakdown (GST + PST/HST/QST) |
|---|---|---|---|
| Alberta | GST Only | 5% | 5% GST |
| British Columbia | GST + PST | 12% | 5% GST + 7% PST |
| Manitoba | GST + PST | 12% | 5% GST + 7% PST |
| Saskatchewan | GST + PST | 11% | 5% GST + 6% PST |
| Ontario | HST | 13% | 13% HST (5% GST + 8% PST) |
| Quebec | GST + QST | 14.975% | 5% GST + 9.975% QST |
| New Brunswick | HST | 15% | 15% HST (5% GST + 10% PST) |
| Nova Scotia | HST | 14% | 15% HST (5% GST + 9% PST) |
| Prince Edward Island | HST | 15% | 15% HST (5% GST + 10% PST) |
| Newfoundland & Labrador | HST | 15% | 15% HST (5% GST + 10% PST) |
| Northwest Territories | GST Only | 5% | 5% GST |
| Yukon | GST Only | 5% | 5% GST |
| Nunavut | GST Only | 5% | 5% GST |
Canada’s GST Filing Process
Filing GST returns in Canada may seem like a bureaucratic process, but once you break it down into steps, there will not seem like much to keep track of. Knowing how to file GST returns in Canada is an integral part of your responsibilities for compliance, whether you are a business just starting out, or an existing business growing, and nothing is worse than a surprise audit from CRA.
Step 1: Register for GST/HST
If your business earns more than CAD 30,000 in revenue over four consecutive calendar quarters, you must register for a GST/HST number with the Canada Revenue Agency (CRA).
Once registered, you’ll receive a Business Number (BN) and a GST/HST program account number.
Step 2: Track GST on Sales and Purchases
Start collecting GST on taxable goods and services you sell (known as Output Tax) and keep track of GST you pay on business expenses (Input Tax Credits or ITCs).
You’ll use these numbers to calculate how much GST you owe or can claim back.
Step 3: Choose a Filing Method
In Canada, you can file your GST return online through the CRA’s My Business Account, which is the most popular and convenient method. Many businesses also use tools like Commenda to generate reports, though the final filing must still be done manually on the CRA portal. If eligible, you can also file by mail using paper forms, but this method is slower and less commonly used today.
How to File GST Returns in Canada
If you’re wondering exactly how to file GST returns in Canada, you’re not alone. Many business owners find the process confusing the first time around, but with a step-by-step approach, it becomes much easier to manage.
Step 1: Register for a GST Number
To begin, your business needs to be registered for a GST number through the Canada Revenue Agency. This is a unique identifier that allows you to charge GST on your sales and file returns. Registration can be completed online via the CRA website and is typically required if your revenue exceeds CAD 30,000 annually.
Step 2: Keep Accurate Records
Once registered, maintain accurate records of your business income, expenses, and the GST you’ve collected or paid. This includes invoices, receipts, and transaction summaries. These documents will form the basis of your GST return and ensure your filings are compliant and error-free.
Step 3: Calculate Your GST Liability
Before filing, calculate the GST you owe or can claim back. This means tallying the GST collected from customers and subtracting your input tax credits (ITCs), the GST you’ve paid on business expenses. The result is either the amount you owe the CRA or the amount you’ll be refunded.
Step 4: Complete Your GST Return
Head to the CRA’s My Business Account portal to file your return online. You’ll be prompted to input figures like total sales, taxable sales, GST collected, and ITCs. Choose your reporting period and tax basis (cash or accrual), then proceed through the form carefully to ensure everything is accurate.
Step 5: Review and Submit
Take a moment to review your entire return before submitting. Double-check numbers, reporting dates, and make sure all calculations are correct. Filing errors, like reporting the wrong amounts or missing eligible ITCs, are common but avoidable with a quick review.
Step 6: Make a Payment or Claim a Refund
If you want to pay the GST in Canada, you can make a payment directly through the CRA portal or via online banking. If your ITCs exceed your GST collected, you can claim a refund. Either way, make sure to save your confirmation or receipt for your records.
GST Tax Return Deadlines in Canada
Meeting your GST return deadlines in Canada is crucial for staying compliant and avoiding penalties. Depending on your business’s annual revenue and filing status, the Canada Revenue Agency (CRA) assigns one of three reporting frequencies: monthly, quarterly, or annually.
1. Monthly Filing
This is usually required for businesses with annual taxable supplies of over CAD 6 million. Monthly filing means you must submit your GST return and payment within one month after the end of each reporting period. For example, for the March reporting period, the deadline is April 30.
2. Quarterly Filing
Businesses with taxable supplies between CAD 1.5 million and CAD 6 million generally file on a quarterly basis. The deadline to file and pay is also one month after the end of each quarter. For instance, a Q1 return (January to March) would be due by April 30.
3. Annual Filing
Smaller businesses with taxable supplies of CAD 1.5 million or less may be eligible for annual filing. The return is usually due three months after your fiscal year-end. If your fiscal year ends on December 31, the GST return in Canada would be due by March 31 of the following year.
Penalties for Late Filing
If you miss the deadline for filing your GST/HST return in Canada, the Canada Revenue Agency (CRA) can charge penalties and interest. Here’s what you need to know:
1. Penalty for Filing Late
You’ll be charged 1% of the tax you owe, plus 25% of that 1% for each full month you’re late, up to a maximum of 12 months.
Example:
If you owe CAD 10,000 and file 3 months late:
- 1% of CAD 10,000 = CAD 100
- 25% of CAD 100 = CAD 25
- CAD 25 × 3 months = CAD 75
Total penalty = CAD 100 + CAD 75 = CAD 175
2. Penalty for Not Filing Electronically
If you’re required to file electronically but don’t:
- CAD 100 penalty for the first time
- CAD 250 penalty for each time after that
3. Penalty for Incorrect Reporting
If you misreport or underreport certain amounts (like input tax credits):
- 5% of the misreported amount, plus
- 1% per month until it’s corrected (up to 10%)
Staying on top of your filing deadlines is key to avoiding costly penalties and interest. Timely and accurate GST/HST returns are essential for smooth compliance with Canada’s tax laws.
GST Compliance in Canada
GST compliance in Canada is about more than just filing returns on time. It involves correctly charging GST to customers, maintaining clear and organized financial records, submitting accurate reports, and promptly remitting any taxes owed.
Non-compliance can result in hefty fines, loss of input tax credits, or even audits. For example, if you collect GST but fail to remit it to the CRA, your business could face serious financial penalties. On the flip side, overpaying GST or failing to claim eligible credits means you’re losing out on money that could be reinvested in your operations.
Regular internal audits, up-to-date invoicing practices, and reliable bookkeeping go a long way in ensuring your business stays compliant. For many businesses, outsourcing this to trusted software or a tax partner like Commenda provides peace of mind and allows them to focus on what they do best.
Canada GST Reporting Requirements
Most businesses file using Form GST34, which summarizes total sales, GST collected, ITCs claimed, and any adjustments. Although documents aren’t submitted with the return, CRA requires businesses to keep all supporting records, such as invoices and receipts, for at least six years.
Here are the key documents you should maintain:
1. Sales Invoices and Receipts
Keep a copy of all sales invoices issued to customers, including taxable, zero-rated, and exempt sales. These documents provide proof of revenue and the GST you’ve collected.
2. Purchase Invoices and Bills
Hold onto all invoices and bills related to business expenses and purchases. These are necessary to claim Input Tax Credits (ITCs) and must clearly show the GST paid.
3. GST Collected and ITC Summaries
Maintain a summary of GST collected and ITCs claimed during each filing period. Most accounting software can generate these automatically and help with CRA audits.
4. Bank and Financial Statements
Your business bank statements, credit card statements, and general ledger entries help verify your financial records. They’re essential for reconciling your GST filings.
5. Contracts, Agreements, and Leases
Store contracts for services, leases, or long-term agreements. These help clarify the tax treatment and can affect how and when GST is applied.
6. Import/Export Documentation
If you import goods or export services, keep customs declarations, bills of lading, and proof of GST paid on imports. These are required to support any GST credits on international transactions.
This sums up all the Canada GST reporting requirements including documents and invoices. Let’s see how you can use technology to make filing and staying compliant in Canada easier.
The Role of Technology in GST Tax Returns
As businesses grow and digital operations expand, relying on manual methods to manage GST returns just doesn’t cut it anymore. Technology has redefined how Canadian businesses approach tax compliance, bringing speed, accuracy, and peace of mind.
Automation tools simplify complex tasks like tax rate calculation, return preparation, and deadline tracking. With real-time data syncing across accounting, invoicing, and eCommerce platforms, businesses can avoid errors and always stay audit-ready.
Smart software also reduces the chances of missed deadlines or misfiled data, helping companies maintain full compliance with Canadian GST regulations. Commenda takes it a step further by offering real-time tax calculation, exemption certificate management, and fully managed filings, so you can focus more on growth and less on paperwork.
How Commenda Can Help
At Commenda, we believe GST compliance in Canada shouldn’t slow down your business. That’s why our platform is designed to make managing GST returns in Canada as smooth and hands-off as possible. With rooftop-level accuracy, we ensure the correct tax rate is applied right down to the street level, no more over or undercharging.
1. Tracks Your Nexus Automatically
Commenda keeps an eye on your business activity across provinces and territories, so you’ll always know where you need to collect GST/HST.
2. Applies Rooftop-Level Accurate Tax Rates
It calculates the exact tax rate based on each customer’s street-level address, helping you charge the right amount every time.
3. Syncs Sales & Expenses in Real Time
By connecting with your invoicing, eCommerce, or accounting tools, Commenda keeps your GST collected and input tax credits perfectly up to date.
4. Generates CRA-Ready GST Returns
Your GST data is automatically turned into a clean, error-free return that’s ready to file with the CRA, no spreadsheets needed.
5. Files Returns Automatically
Commenda submits your return on time and stores the payment record, so you can stay compliant without lifting a finger.
With Commenda, GST compliance in Canada becomes effortless, accurate, and stress-free, so you can focus on growing your business, not managing tax paperwork. Ready to simplify your GST filings? Book a demo today!
