Instalment Payments of GST/HST

Instalment Payments of GST/HST

Where GST registrants file and remit on an annual basis, the CRA does not wait a year or more for the tax. As is the case with income tax, annual GST filers are required to make a series of four instalment payments at regular intervals throughout the year.

Instalment due dates fall one month after the end of each fiscal quarter of the registrant’s fiscal year. So, the instalment deadlines for a GST registrant with a December 31st year end would fall on the following dates:

Instalment payments of GST are made using a personalized form, RC160 GST/HST Interim Payments Remittance Voucher. Once an instalment payment is made, the CRA will send the registrant two copies of a personalized RC160 for future use. In the event a registrant needs to order a personalized form (for example, for a first instalment payment), one can be ordered from the CRA’s Web site at www.cra-arc.gc.ca/orderforms or by calling the CRA’s forms line at 1-800-959 2221.

Instalment payments can be made by mail or through a financial institution. Once the payment is credited to the registrant’s account, the CRA will send a Statement of Interim Payment, confirming the receipt of the payment, providing information on instalment credit balances by period, showing any transfers in and out of the instalment account and finally, showing how instalment credits were applied to assessments. When the return for the year is filed, a “true-up” is done. If instalments paid exceed GST/HST required remittances for the year, then the GST registrant will receive a refund of the overpayment. Where, however, instalments paid are less than the tax owing, the difference must be remitted to the CRA.

If instalments are not made on time, or are insufficient, interest will be charged from starting the day after the instalment was due, until the full payment is made, or until the date the net tax owing for the year is due, whichever is later. As with interest charges on late or deficient income tax payments, the rate charged on GST/HST deficiencies is equal to the CRA’s prescribed rate.

In determining the amount of instalment payments to make, the GST registrant has a choice. If instalment payments made each represent at least one-quarter of the previous year’s GST/HST liability (i.e., each instalment payment made during 2011 is at least one-quarter of the total GST/HST liability for the 2010 fiscal year), then no interest charges will be levied, even if there is eventually a balance owed on filing for the 2011 year. The GST registrant is also free to base the quarterly instalment payments on an estimate of the current year’s liability, but there is a risk to that approach. If there is a balance owed on filing (that is, the instalment payments represented less than the year’s total liability), then interest will be charged on the deficiency.

Finally, there is a de minimus rule with respect to GST/HST instalments which exempts the smallest businesses from the need to make instalment payments. Where the net GST/HST payable by a business for a fiscal year is less than $3,000, that business is not required to make instalment payments of GST/HST during the following year.