GST/HST Responsibilities for Incorporated Businesses – A Complete Guide by a Montreal CPA Firm Near You

Understanding GST/HST responsibilities for incorporated businesses in Canada is
essential for avoiding penalties, interest, and CRA audits. Whether you run a consulting
company, retail store, online business, construction firm, or professional corporation,
your GST/HST obligations begin as soon as you meet certain thresholds—or even
earlier, depending on your industry. Many incorporated businesses misunderstand
registration requirements, incorrectly charge tax, fail to remit on time, or mistakenly
claim ineligible input tax credits (ITCs). These errors often trigger CRA reviews, which
can lead to reassessments covering multiple years. This guide explains the GST/HST
responsibilities for incorporated businesses in Canada, including registration rules,
collecting and remitting tax, filing cycles, ITCs, and compliance obligations.
Legal and Regulatory Framework
GST/HST obligations in Canada are governed by the Excise Tax Act (ETA). Key rules
for incorporated businesses include:

1. GST/HST Registration – Small Supplier Rule
   • Corporations must register for GST/HST once taxable revenues exceed $30,000 in a
   rolling 12-month period.
   • “Taxable revenues” include worldwide revenues from taxable supplies (excluding
   exempt services).
   • Corporations may register voluntarily before hitting $30,000.

2. Charging & Collecting GST/HST
   • Corporations must charge GST/HST on all taxable goods and services, except zero-
   rated or exempt supplies.
   • Tax rates depend on the province of supply—5%, 13%, or 15%.
   • Online and interprovincial sales require special place-of-supply rules.

3. Filing & Remitting GST/HST
   Corporations are assigned filing frequencies based on revenue:
   • Annual (smallest corporations)
   • Quarterly
   • Monthly (larger corporations)
   GST/HST returns are filed through GST34, and payment must accompany the return.

4. Input Tax Credits (ITCs)
   Corporations may claim ITCs on GST/HST paid for:
   • business expenses
   • equipment
   • subcontractors
   • rent and utilities
   • software and supplies
   • vehicle-related expenses (business portion only)
   ITCs require proper documentation, including invoices with GST/HST numbers.

5. Special Rules
   • Associated corporations may require GST/HST group elections.
   • Construction businesses must comply with “self-assessment” rules.
   • Online businesses may require marketplace facilitator compliance.
   • Quebec businesses must register separately for QST.
   These rules define the GST/HST responsibilities for incorporated businesses in
   Canada.
   Key Court Decisions

Major cases illustrate CRA’s strict application of GST/HST rules.
In Global Cash Access (Canada) Inc. v. Canada, the Federal Court of Appeal confirmed
that businesses must correctly classify taxable vs exempt supplies—misclassification
resulted in millions of dollars of reassessed GST/HST.
In Pangaea Consultants Inc. v. Canada, CRA denied ITCs because invoices did not
meet documentation standards. The court upheld CRA’s denial, confirming strict ITC
requirements.
In North Shore Power Group v. Canada, CRA reassessed a corporation for failing to
charge GST/HST on taxable intercompany transactions; the court upheld CRA’s
position.
In Air Canada v. Canada, the Supreme Court reinforced that GST/HST is a strict
liability tax—errors in invoicing or collection cannot be ignored.
These rulings show that CRA enforces GST/HST responsibilities for incorporated
businesses in Canada with zero tolerance for incorrect filings.
Why CRA Targets This Issue
CRA aggressively reviews GST/HST filings for incorporated businesses because
GST/HST is a trust tax—collected from customers and remitted to the government. CRA
focuses on:
• businesses failing to register after exceeding the $30,000 threshold
• corporations charging GST/HST but not remitting it
• companies claiming ITCs without proper documentation
• vehicle and home office ITCs claimed incorrectly
• repeated late filings or late payments
• discrepancies between GST/HST returns and corporate financial statements
• construction and real estate businesses where self-assessment rules apply
Because GST/HST non-compliance often involves large amounts across multiple years,
CRA considers this a high-risk category.
Mackisen Strategy
At Mackisen CPA Montreal, we help incorporated businesses maintain perfect GST/HST
compliance. Our structured approach includes:
• determining whether the corporation must register immediately or voluntarily
• setting up GST/HST and QST accounts correctly
• applying the correct tax rate based on place-of-supply rules
• preparing monthly, quarterly, or annual GST/HST filings

• reconciling GST/HST with bookkeeping records
• documenting ITCs with CRA-approved invoices
• identifying red flags that trigger CRA audits
• managing CRA reviews and defending ITC claims
• ensuring construction and real estate clients comply with self-assessment and rebate
rules
We implement systems that ensure your corporation meets all GST/HST responsibilities
in Canada smoothly and accurately.
Real Client Experience
A technology company failed to register for GST/HST after surpassing $30,000 in sales.
CRA assessed them for uncollected tax. We performed a voluntary disclosure, reducing
penalties and negotiating interest relief.
Another corporation claimed ITCs on undocumented restaurant meals and travel costs.
CRA denied the credits. We corrected bookkeeping practices, established proper
invoice controls, and protected future filings.
A construction firm failed to self-assess GST on subcontractor services. CRA
reassessed them across multiple years. We corrected filings and provided future
compliance structures.
These cases show the importance of understanding GST/HST responsibilities for
incorporated businesses in Canada.
Common Questions
Business owners often ask whether they can claim ITCs on all expenses. Only
business-related expenses with proper documentation qualify.
Others ask whether they must charge GST/HST to U.S. clients. Generally, exports are
zero-rated, but rules vary by service type.
Some ask whether missed GST/HST registration can be corrected. Yes, through the
Voluntary Disclosures Program.
Another question: Does incorporating automatically require GST/HST registration?
No—registration depends on taxable revenues.
These questions highlight why understanding GST/HST responsibilities in Canada is
essential.
Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps
incorporated businesses stay compliant while maximizing ITCs and minimizing audit
risk. Whether you are registering for GST/HST, filing returns, or resolving CRA issues,
our expert team ensures precision, transparency, and protection from tax exposure.