# HST Question



## Bunny (Jul 22, 2009)

Hello

Am wondering about some of the "rules" surrounding the HST (live in Ontario).

If a sole prop business owner has always made just around the 30K mark in gross business income does he need to collect and remit the HST?

(He was never registered for PST or GST.)

What would happen if in 2011 he made more than 30K but didn't think he was going to, so therefore didn't collect any from his customers? Would he then be on the hook to pay the taxes that he didn't collect? Would be next to impossible to go back to those same customers and ask them to pay the taxes...

What are the penalities if you collect and then don't remit because you end up under the 30K?

Thanks for any help you can offer on this.


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## the-royal-mail (Dec 11, 2009)

If there is even a slight chance of exceeding the $30K I think you should register and collect, just in case. Most businesses hiring the services of a sole proprietor won't be surprised when you bill them for GST anyway.


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## jamesbe (May 8, 2010)

I'll throw this out there, because there are bound to be non-believers. But you do not have to collect the taxes if you wish not to. Something to do with slave labour laws haha. There is a business in Ottawa that does not collect and has not for 20+ years. Gov won't do anything because he is quoting slave labour (not getting paid to collect the taxes.).

On a serious note though, why not just sign up and collect then if this is a worry? I like collecting it because with the quick method of accounting I get to keep some


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## Bunny (Jul 22, 2009)

Are you serious about the slave labour thing?

Do you know what the penalities are for collecting and not remitting?

His business is so up and down in terms of cash flow by the time he goes to remit he may very well have spent the HST portion......


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## MoneyGal (Apr 24, 2009)

If it's good enough for Wesley Snipes...


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## plen (Nov 18, 2010)

From CRA guide RC4022



> Effective date of registration
> The effective date of your GST/HST registration depends
> on when you go over the small supplier threshold amount
> of $30,000 ($50,000 if you are a public service body). If your
> ...


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## jamesbe (May 8, 2010)

Serious, don't collect don't remit. Competely serious.

If you collect then yes of course you must remit. I wouldn't do it and I'm sure most wouldn't even try to but it's legal to just say "F u" to taxes apparently.


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## the-royal-mail (Dec 11, 2009)

jamesbe said:


> Serious, don't collect don't remit. Competely serious.
> 
> If you collect then yes of course you must remit. I wouldn't do it and I'm sure most wouldn't even try to but it's legal to just say "F u" to taxes apparently.


While I don't have time to do all sorts of research to refute this, I still must disagree with you on this assertion, jamesbe. Sorry man but messing with CRA is NOT a good idea. Don't do anything to attract their attention. They are not stereotypical gov't slackers. They are serious about what they do and WILL eventually figure out what took place and catch up with you at the most inopportune time. Again, I don't have time or desire to do all sorts of research to give you factual evidence of why this is, it just is. It's like air. It just is. Not the kind of thing you argue about.


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## pacman (Sep 6, 2009)

jamesbe said:


> Serious, don't collect don't remit. Competely serious.
> 
> If you collect then yes of course you must remit. I wouldn't do it and I'm sure most wouldn't even try to but it's legal to just say "F u" to taxes apparently.


This is just stupid advice!

pacman


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## OhGreatGuru (May 24, 2009)

I'm sure CRA has a computer program that looks at whether your business income is over $30K, and if it is, it looks to see if there is a GST/HST return. If not, you will hear from their auditors. They have a lot more money than you do to fight some spurious constitutional claim in court.


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## GeniusBoy27 (Jun 11, 2010)

When you make more than $30K in a year, then you should get a HST number, and then remit and submit taxes.


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## cardhu (May 26, 2009)

bunny said:


> If a sole prop business owner has always made just around the 30K mark in gross business income does he need to collect and remit the HST?


Define what you mean by “just around” … do you mean sometimes above 30k and sometimes below?? … or always below?? … it makes a difference.



> _What are the penalities if you collect and then don't remit because you end up under the 30K?_


Similar to other forms of tax-fraud, I would expect. More likely a hefty financial penalty than jail-time. 



> _What would happen if in 2011 he made more than 30K but didn't think he was going to, so therefore didn't collect any from his customers? Would he then be on the hook to pay the taxes that he didn't collect? _


The requirement to collect HST has nothing to do with what he _“thinks”_ his revenues will be … it is based on what is revenues actually are … he is only required to register, and to collect, once he meets the criteria that are very clearly spelled out in the guide that plen referred you to … there is no expectation to collect GST/HST retroactively for periods before you were required to do so … you only collect it from the specified moment forward. 

Although there are grey areas in much of tax law, this is not one of them … it is very much black and white … there is no “maybe” and registering “just in case” is unnecessary and creates extra book-keeping headaches for no valid reason.


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## MoneyGal (Apr 24, 2009)

Here is the specific information on late-filing penalties for an HST return: 

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/rtrns/pnlts-eng.html

Snipped from that publication: 

*Failure to file*

A penalty will apply to any return you file late unless there is a $0 amount owing or we owe you a refund on that return. We will calculate the penalty as follows:

(a) 1% of the amount owing; plus
(b) the result of the following calculation:

A × B

where

A is 25% of the amount you calculated in (a)
B is the number of months the return is overdue (to a maximum of 12 months)

*Demand to file*

If you receive a demand to file a return and do not do so, a penalty of $250 will be charged.

You cannot claim an income tax deduction for any penalty paid or payable for failing to file a GST/HST return.


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## jamesbe (May 8, 2010)

I knew my post would be against popular belief but it is 100% lawful and the cra can't do a thing about it.

I said three times now, that I don't or wouldn't do it, but I know a company that has been for 20+ years and has never been challenged. He doesn't collect the taxes he informs his customers it is up to them to pay the taxes due.

I love how anything none conforming gets and automatic "can't be done" attitude, most especially on this forum, I knew it would draw a rise haha


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## cardhu (May 26, 2009)

Late filing is a relatively minor issue ... fraudulently collecting the tax is a different matter entirely.


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## ghostryder (Apr 5, 2009)

jamesbe said:


> I knew my post would be against popular belief but it is 100% lawful and the cra can't do a thing about it.
> 
> I said three times now, that I don't or wouldn't do it, but I know a company that has been for 20+ years and has never been challenged. He doesn't collect the taxes he informs his customers it is up to them to pay the taxes due.



Bull.


Name the company.


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## Westerly (Dec 26, 2010)

If you are over the small supplier threshhold, are not HST registered, and get audited, CRA can / will register you back to the appropriate time that you should have registered. You will be deemed to have collected (whether you did or not) and will remit the tax plus penalty and interest.

The auditor may have decided not to go back too far at 5% on registration in the past, but now at 12% I would expect a different approach. 

I wouldn't want to be the one testing the labour thing.

IMO


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## bratok (Mar 8, 2011)

what if you are a unregistered small business, and today (March 2011) realize that 2010 income was over 30K and GST should've been collected?
Is it not too late to register back to the effective date, because the payment deadline is not until April 30?


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