When you register you will be assigned a GST reporting period, which will be monthly, quarterly, or annually depending upon your total annual revenue. You are entitled to remit more frequently than your assigned reporting period, which many lawyers do as it entitles them to claim input tax credits more frequently. The assigned and optional reporting periods are as shown on the following chart.
The calendar quarters are the three-month periods ending March 31, June 30, September 30 and December 31. If your reporting period is monthly or quarterly, you must file your GST return and remit any amount owing not later than one month after the end of the reporting period.
If your reporting period is annual, you must file your return and remit any amount owing not later than three months after the end of your fiscal year. The fiscal year is the financial year of your business. Your fiscal year for GST purposes is generally the same as your taxation year for income purposes. If you are practising as a corporation, you can elect either to use your taxation year or a calendar year for GST purposes.
If you are an annual filer who is required to make quarterly installments (usually calculated on the previous year’s net tax), they are due no later than one month after the end of the fiscal quarter.
You must file a GST return every reporting period, even if you have no GST to remit and are not expecting a refund. In other words, even if you have no business transactions in the reporting period, you still have to file. You will be charged a penalty for failure to file on time, and you will experience delays in receiving future refunds.
If you are expecting a refund or rebate after filing a GST return, you will not receive it until you have filed all returns for all of your applicable business program accounts with CRA (including income tax accounts). Also, if you are expecting refund and you owe amounts under any of your CRA accounts, whether it be GST or income tax accounts, the refund will be used automatically to offset the other account debts.
For any given reporting period, the amount of tax collected is calculated as the total of all tax on services which have been paid for or on which payment is due, whichever is the earlier date. Therefore, if you have billed your client but not yet been paid, the GST is deemed to have been collected by you within that reporting period for the purposes of calculating the net GST to be remitted.
The amounts you have collected for GST are deemed to be held in trust for the federal government. However, you have authority to deduct the amount of your input tax credits from the GST trust monies, and it is only the net tax that must be remitted at the appropriate interval.
GST is not remitted out of the trust account – it should be transferred to your general account (along with the fees associated with the client matter if they have been properly billed). GST is then paid from your general account.