Navigating GST/HST in Your Bookkeeping Practices

Chosen theme: Navigating GST/HST in Your Bookkeeping Practices. Welcome to a clear, practical journey through Canadian sales tax as it lives inside your day‑to‑day books. Expect friendly guidance, real stories, and actionable tips you can use today—then subscribe for more.

What GST and HST Really Cover

GST is the federal 5% tax on most supplies in Canada, while HST combines federal and provincial portions in participating provinces. Your bookkeeping reflects both what you charge and what you can recover, making classification choices incredibly consequential.

Place‑of‑Supply in Plain Language

Place‑of‑supply rules determine which rate applies based on where a good is delivered or where a service is considered supplied. Understanding these rules reduces costly mischarges and client disputes, so ask questions below about scenarios you find confusing.

Zero‑Rated vs Exempt: Why It Matters

Zero‑rated supplies are taxable at 0%, meaning you typically claim input tax credits, while exempt supplies usually block ITCs. Mixing them demands careful tracking, or you risk overstating credits. Bookmark this page and subscribe for our upcoming decision tree.

Registration Triggers and Smart Timing

Generally, you must register when your worldwide taxable supplies exceed $30,000 over the last four consecutive calendar quarters or in a single quarter. Track revenue monthly and quarterly to avoid surprises, and set alerts inside your bookkeeping software.

Setting Up Your Books and Software for GST/HST

Chart of Accounts That Works

Create distinct accounts for GST/HST collected on sales, GST/HST paid on purchases, and a clear net liability account. This separation simplifies reconciliations, clarifies cash planning, and helps you answer auditor questions confidently when timing differences appear.

Tax Codes and Rates You Should Configure

Set tax codes for GST at 5%, province‑specific HST such as 13% or 15%, and codes for zero‑rated and exempt supplies. Train your team to apply correct codes by product or service to keep your filings consistent and defensible.

Invoicing and Documentation That Pass CRA Scrutiny

Include your legal business name, billing date, unique invoice number, description of goods or services, subtotal, tax rate and amount, and your GST/HST registration number. Accurate place‑of‑supply details ensure the correct rate, minimizing client disputes and rework.

Invoicing and Documentation That Pass CRA Scrutiny

Capture receipts immediately using a mobile app, tag by tax code, and reconcile weekly. Attach documents to transactions inside your software so context is never lost. Tell us your favorite tool, and we’ll compare options in a future post.

Eligibility and Apportionment

Claim ITCs on GST/HST paid for commercial activities. For mixed‑use costs, apportion reasonably and document your method. Revisit allocations annually to reflect reality, and keep evidence. Ask us for an apportionment worksheet tailored to your industry and size.

Common ITC Mistakes to Avoid

Missing registration numbers on supplier invoices, claiming tax on employee allowances, or forgetting to exclude exempt activity portions can derail returns. Build a pre‑filing checklist, and invite your team to a quick training session. We’ll share ours if you subscribe.

Story: The Startup That Recovered Thousands

A SaaS startup organized two years of neglected receipts, categorized spending properly, and documented business use percentages. Their amended filings recovered thousands in credits. Their secret was discipline, not luck—join our list for the same step‑by‑step playbook.

Filing, Remittance, and Staying Ahead

Choosing the Right Filing Frequency

Filing frequency often aligns with revenue levels: monthly, quarterly, or annually. Select a schedule that balances cash flow control and administrative work. Many bookkeepers prefer monthly to catch issues early—tell us what works for your team and why.

Deadlines, Remittance Methods, and Penalties

Know your due dates and use reliable remittance methods like online banking or NETFILE‑supported portals. Late filings trigger interest and penalties, compounding quickly. Calendarize deadlines with reminders, and keep a buffer in your tax account to reduce stress.

Year‑End Reconciliations That Catch Errors

Reconcile tax collected to sales reports, and ITCs to expense ledgers. Investigate discrepancies by invoice, tax code, and date. This annual discipline reveals miscodings early. Want our reconciliation workbook? Subscribe and comment “recon” to receive the link.