Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



New Electronic GST/HST Return Filing Requirements Start July 1, 2010

To little fanfare and no media attention, on January 4, 2010, The Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture and Agri-Food) announced proposed changes to electronic filing requirements for goods and services tax/harmonized sales tax (GST/HST) registrants beginning July 1, 2010.

The reason for the electronic filing requirements is that the Canada Revenue Agency needs to gather information so that the Department of Finance can communicate information to Ontario and British Columbia pursuant to the CITCAs (a.k.a. HST Agreements).

Currently, only GST/HST registrants who meet the criteria set by the Minister of National Revenue have the option to use electronic filing. As a result of the proposed changes, restrictions will be removed so that all registrants, including those registrants that file a return with Revenu Québec, will be able to file electronically.

Under the new proposed measures, the following groups will be required to file their GST/HST returns electronically:

  • GST/HST registrants with greater than $1.5 million in annual taxable supplies (except for charities); or
  • all registrants required to recapture input tax credits for the provincial portion of the HST on certain inputs in Ontario or British Columbia; or
  • builders affected by the transitional housing measures announced by Ontario or British Columbia.

In general, charities and most GST/HST registrants with annual taxable supplies of $1.5 million or less will not be affected by these changes, although the CRA is encouraging all GST/HST registrants, regardless of their filing frequency and reporting requirements, to use electronic services.

Regulations specifying the persons and classes of persons who will be required to file an electronic return will be available soon (government has been prorogued).

The CRA will offer several electronic filing options for GST/HST registrants. However, many registrants will not have an option and will be forced to use a particular electronic filing method.

  • GST/HST NETFILE
    • Netfile is a free Internet-based filing service that allows registrants to file their returns directly to the CRA over the Internet. To file using GST/HST NETFILE, registrants complete an online form, enter the required information and confirm that they want to file their return. Once the registrant hits <submit></submit></submit><//submit>a confirmation page will immediately be displayed containing the six-digit confirmation number.
    • It is proposed that the following GST/HST registrants would be required to file an electronic return using GST/HST NETFILE effective for the first reporting period that ends on or after July 1, 2010:
    • any registrants that are required to recapture ITCs on the provincial portion of the HST on certain inputs in Ontario or British Columbia (see below); and
    • builders that
      • make sales of grandparented housing where the purchaser is not entitled to claim a GST/HST new housing rebate or new residential rental property rebate;
      • make sales of housing that are subject to the HST where the builder purchased the housing on a grandparented basis;
      • are required to report a transitional tax adjustment amount; or
      • report provincial transitional new housing rebates (see below).
    • In conjunction with these proposed new filing requirements, the CRA will include new information fields on the GST/HST NETFILE return for these registrants.

  • GST/HST TELEFILE
    • Telefile allows eligible registrants to file their GST/HST returns using their touch-tone telephone and a toll-free number.
    • It is also proposed that each builder having greater than $1.5 million in annual taxable supplies that is not otherwise required to file using GST/HST NETFILE and that pays or credits a GST/HST new housing rebate amount to the purchaser and claims that amount as a deduction from the builder’s GST/HST liability would be required to file an electronic return using GST/HST NETFILE or GST/HST TELEFILE effective for the first reporting period that ends on or after July 1, 2010.

    • As a result of the proposed changes, the CRA will include new information fields on the GST/HST NETFILE and GST/HST TELEFILE returns for these registrants.

  • Electronic Data Interchange (EDI)
    • EDI is a computer-to-computer exchange of information in a standard format. Eligible registrants can use EDI to file their GST/HST returns and remit their GST/HST payments electronically.
  • GST/HST Internet File Transfer (GIFT)
    • GIFT is a new option that allows eligible registrants to utilize third-party CRA certified accounting software to file their returns electronically.
    • It is also proposed that all GST/HST registrants, other than those required to file using GST/HST NETFILE or GST/HST TELEFILE and with greater than $1.5 million in annual taxable supplies, excluding charities, would be required to file an electronic return using GST/HST NETFILE, GST/HST TELEFILE, EDI or GIFT effective for the first reporting period that ends on or after July 1, 2010.

The CRA provides the following chart:

 

 

Type of Business

Filing Options

Businesses that:
a) are required to recapture ITCs for the provincial portion of the HST on certain inputs in Ontario or British Columbia; or
b) are builders who sell grandparented housing where the purchaser is not entitled to claim a GST/HST new housing rebate or new residential rental property rebate; or
c) are builders who sell housing subject to the HST where the builder purchased that housing on a grandparented basis; or
d) are builders who are required to remit the transitional tax adjustment on housing; or
e) are builders who are reporting provincial transitional new housing rebates.

GST/HST NETFILE

Unless required to file using GST/HST NETFILE, builders with greater than $1.5 million in annual taxable supplies that pay or credit a GST/HST new housing rebate amount to the purchaser and claim that amount as a deduction from their GST/HST liability.

GST/HST NETFILE
GST/HST TELEFILE

Businesses that are not required to file using GST/HST NETFILE or GST/HST TELEFILE and with annual taxable supplies exceeding $1.5 million, excluding charities.

GST/HST NETFILE
GST/HST TELEFILE
GIFT
EDI

All other businesses.

GST/HST NETFILE
GST/HST TELEFILE
GIFT
EDI
Paper Return

If this is unclear and you require assistance, please contact Cyndee Todgham Cherniak at 416-307-4168.

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