Managing GST and the Common Mistakes We See
The Goods and Services (GST) tax applies to almost all goods and services in Canada. It also applies to supplies in real property, including land and buildings.
Most Canadian businesses are responsible for collecting and remitting the GST on taxable goods and services they offer. However, without the proper knowledge on where GST is applicable, things can get confusing. It doesn’t take a rocket scientist, but not really understanding GST legislation and how it applies to your specific business can become very costly for you, the business owner.
For example: in an audit, you may be required to provide documentation and proof of paying/charging GST on applicable products and services. If you cannot prove it, the auditor will require you to pay the amount on top of penalty fees and interest from the time of the transaction.
Which brings us here. Below are the most common mistakes we see:
- Claiming more than 50% of the GST on eligible meal expenses
- Not claiming the correct amount of GST on brokerage related bills (usually a portion of GST owed for importing goods on top of the brokerage service GST charge)
- Claiming the total GST amount of a vehicle purchased in sole proprietorship
- Failing to charge GST on commercial rent (not applicable to residential rent)
- Failing to carry out self-assessment GST on commercial/farmland purchases
- Not claiming the full HST amount like GST (the total amount of tax paid)
- Not charging HST to customers in relevant provinces
Pro tip: When in doubt, please connect with your bookkeeper or accountant to see if you’ve recorded a transaction correctly. (There is never any shame in asking!)
Staying on top of your bookkeeping on a monthly basis will help you collect data and allow you to review documentation properly. It will also help you avoid late fees and interest when filing GST!
If this seems all too confusing or if you find you’re too busy to keep up with your bookkeeping, connect with us. We’d love to help!