GST/HST and QST Remittances: How to Keep Sales Tax From Catching You Short

Many Canadian small businesses look healthy on the bank balance and then struggle the week a GST/HST return is due. The tax was collected months ago, mixed in with operating cash, and quietly spent. This guide explains how the remittance calendar works, how to plan for it, and what is different in Quebec with the QST and Revenu Québec. It is general information, not tax advice for your situation.

Sales tax collected is not your money

When a registrant charges GST/HST on a sale, the CRA's position is clear: you hold this tax in trust until you send it to the CRA. It lands in the same bank account as your revenue, which is exactly why it causes trouble. Your balance looks larger than the cash you can actually use.

What you owe for a period is your net tax: the tax you collected or charged, minus the input tax credits (ITCs) you can claim on the GST/HST you paid on business purchases. In Quebec, the QST side works the same way with input tax refunds (ITRs). Net tax can swing a lot from one period to the next, for example after a large equipment purchase, so planning with last period's number alone is risky.

How your reporting period drives your cash calendar

The CRA assigns a reporting period based on your annual taxable supplies (broadly, your taxable sales in Canada). You can choose to file more often than the period you are assigned.

Due dates follow from the period:

• Monthly and quarterly filers: file and remit no later than one month after the end of the reporting period.
• Annual filers: generally file and remit no later than three months after the end of the fiscal year.
• Individuals with business income, a December 31 year-end and annual filing: the return is due June 15, but any amount owing must be paid by April 30.

Each option has a cash flow trade-off. Monthly filing means small, frequent payments and little time for collected tax to pile up. Annual filing means a large single payment, often a year's worth of tax, which is the most common source of a nasty surprise. If you file annually, the real discipline is setting money aside along the way.

Instalments for annual filers

Annual filing does not always mean one payment a year. If you are an annual filer and your net tax was $3,000 or more for the previous fiscal year and is $3,000 or more for the current fiscal year, the CRA requires quarterly instalments during the current year. The threshold applies to the whole business, including branches or divisions that file separately.

• Instalments are due within one month after the end of each fiscal quarter. For a December 31 year-end, that is April 30, July 31, October 31 and January 31.
• They are usually one quarter of the previous year's net tax. You can base them on a lower current-year estimate if you expect less net tax. If you pay one quarter of last year's net tax in full and on time, the CRA does not charge instalment interest; interest is charged on any part of an instalment that is paid late or not paid.
• The annual return then reconciles your instalments against the net tax you actually owe; any balance is due by the regular due date.

Quebec: QST, and GST/HST filed with Revenu Québec

If your business is physically located in Quebec, Revenu Québec generally administers the GST/HST as well as the QST, so you file both with Revenu Québec on its forms (selected listed financial institutions are the main exception). Your cash plan therefore has to cover two taxes, usually paid to one administrator.

• The QST rate (9.975%) is higher than the GST rate (5%), so in a typical Quebec business the QST share of each remittance is about twice the GST share.
• Revenu Québec applies the same $3,000 instalment test to the QST. Because of the higher rate, it notes you may have to pay QST instalments even if you do not have to pay GST/HST instalments.
• Instalments are due no later than one month after the last day of each quarter of your fiscal year.
• If the GST/HST or QST amount to remit is $10,000 or more, Revenu Québec requires electronic payment, except in particular circumstances.
• A payment counts as received when it reaches Revenu Québec or when your financial institution processes it. Leave room for your bank's processing time.

Worked example: what is really available in the account

This is a hypothetical example with illustrative numbers. A Quebec business files quarterly. From January to March it makes $200,000 of taxable sales and $60,000 of taxable business purchases.

On March 31 the bank shows $45,000. The owner might think there is room for a $30,000 equipment purchase. In reality, $20,965 is already committed to Revenu Québec, so the cash truly available is about $24,035, before payroll, rent and supplier bills due in April. The purchase would leave the business unable to remit on time.

A simple set-aside routine

1. Open a separate bank account used only for sales tax. It does not have to earn anything; its job is to make the money invisible to day-to-day spending.
2. Each week (or each time you deposit receipts), transfer the tax collected minus the tax paid on purchases since the last transfer. If that is too much bookkeeping, transfer a fixed percentage of receipts and true it up monthly.
3. Reconcile the account to your sales tax liability in the books at least monthly. The balance should be at least what you would owe if the period ended today.
4. Add every return due date and every instalment date to your cash forecast as an outflow, so the payment shows up weeks before it happens.
5. Pay from the tax account only. If it falls short, treat that as a signal that tax money was used for operations and fix the transfer habit, not just the shortfall.

Common mistakes

• Treating the bank balance as available cash during a long annual period.
• Forgetting quarterly instalments, which are due even though no return is filed then.
• Assuming last period's net tax will repeat after a big sale or purchase changed the ITC picture.
• In Quebec, planning for GST but underestimating the larger QST share of the payment.
• Paying on the due date without allowing for bank processing time.
• Assuming your reporting period will adjust on its own when sales change. Check with the CRA or Revenu Québec how and when a change applies.

Rules, thresholds and due dates change. Confirm your own reporting period, deadlines and instalment obligations with the CRA or Revenu Québec, or with your accountant (CPA), before relying on them.

How CashflowCycles helps

CashflowCycles connects to your bank accounts through Plaid with read-only access and syncs transactions daily, so a dedicated tax account sits next to operating cash in the same view. The six-week Obligation Radar shows upcoming committed payments, including remittances, against the cash on hand, so a GST/HST, QST or instalment payment is visible weeks before it is due. Forecasts run 3, 6 or 12 months ahead with base, best and worst cases, and alerts warn you when the cash runway shortens. It works in English and French, with a 30-day free trial.