Most businesses, sooner or later, will have to prepare a GST return for Revenue
Canada. It’s not terribly difficult, and we’ll go over the important parts with you.
Here are some of the most important parts about preparing to pay GST:
Keep good records
This is true for all accounting purposes, but it’s especially helpful for calculating
GST. You need those receipts, so can identify exact amounts of GST both paid and
collected.
GST paid
In order to prepare your GST, you need to know how much GST you paid on
business-related items. This adds up to how much GST was paid out.
Normally, you will be able to subtract this amount from the amount of GST you collected to
arrive at what you will owe.
GST collected
You also need to know how much GST you collected on the sale of items or
services. This is GST that you have collected for Revenue Canada, and it has to be
remitted to them.
Know your tax period
Businesses don’t always have fiscal years that coincide with calendar years. So,
when calculating GST make sure to respect your business’s fiscal year.
Don’t forget foreign currency
If you made purchases in other currencies, make sure you convert back to
Canadian dollars using the exchange rate on the day you made the purchase, so all
your GST numbers are in the same currency.
Sometimes accounting or bookkeeping software will calculate a GST return for
you. That’s all fine and good, but you still need to understand the big picture.
Also, there are different methods for calculating GST, so make sure you
understand whatever method you are using including the exceptions to the rules.
If your GST has got you down, we would be happy to help you prepare your GST.
Contact us if you need an accountant to help you with or anything else related to
business taxation.
If you have any questions about this article or GST, in general, or you want to
make an appointment with an accounting professional at Naicker & Associates,
please contact us at (604) 469-9369. We are based in Port Moody, BC.
