Who should pay GST/HST by Instalment?
Normally, GST/HST payments are due on the same day GST/HST returns are due. If you are an annual filer, you need to pay your GST/HST by the due date to file return and the same goes for quarterly filers who have to pay GST/HST by the due date to file their quarterly return. However, if you are an annual filer and your net GST/HST in a fiscal year is $3,000or more, you have to make equal quarterly instalment payments in the following fiscal year. For example, if your GST/HST in 2014 is $3,000 or more, you need to pay your GST/HST in four equal quarterly instalments in 2015.
How to calculate?
The quarterly payments are usually equal to one-quarter (¼) of your net tax from the previous year. Therefore, you need to pay four equal instalments in 2015 at an amount equal to one-quarter (¼) of your net GST/HST of 2014. You may also choose to calculate your quarterly instalment payments based on an estimate of your net tax for the current year in case you presume that it will be less than it was for the previous year. However, in such case, if your instalment payments are less than the amount you actually should have paid, CRA will charge you interest on the difference.
When to make Instalment payments?
Instalment payments are due within one month after the end of each of your fiscal quarters. Therefore, if you follow calendar year as your fiscal year for GST/HST purpose, your due dates to make instalment payments shall Apr 30 for Q1, Jul 31 for Q2, Oct 31 for Q3 and Jan 31 for Q4. You need to pay balance owing by the due date to file your annual return.
What are the consequences on failure to pay instalments?
If you are liable to pay GST/HST by instalment but fail to do so, you may be charged with interest equal to the basic rate plus 4% on the amount of late or insufficient instalment payments.