Late GST/HST Returns for Sole Proprietors: What Happens if You Fall Behind?

Many sole proprietors register for GST/HST once their business revenue grows past the small supplier threshold. At the beginning, most people intend to stay on top of their filings. But as the business grows and life gets busy, GST/HST filings can easily fall behind.

When GST/HST returns remain outstanding, the CRA may begin estimating the amount of tax they believe the business owes. These estimates are called notional assessments, and they are often higher than the actual amount that should be reported.

The reason is simple: the CRA usually estimates sales but does not know your expenses or the input tax credits you may be entitled to claim.

When we work with business owners who have several years of outstanding GST/HST returns, we typically start by reconstructing the business activity during those periods. This may involve reviewing bank deposits, invoices, and expense receipts to determine the correct GST/HST amounts that should have been reported.

Once the returns are prepared properly and filed, the CRA replaces the estimates with the actual numbers.

For many business owners, bringing their GST/HST account back up to date removes a major source of stress and allows them to focus on running their business again.