HST Input Tax Credit Alert: If You’re Behind Filing, 4 Years is Your Limit
If you own your own business, you know that your HST input tax credit can be a valuable resource financially. As a GST/HST registrant, the ability to recover the GST/HST you paid or owe on purchases and expenses related to your commercial activities by claiming input tax credits can be a big help, especially when you owe a tax debt.
That being said, many business owners fall behind filing their HST returns for a variety of reasons, most often disorganization, lost receipts, or even the knowledge that a debt will be owed and the funds to pay are unavailable.
What most business owners are unaware of, however, is that after 4 years you can’t claim input tax credits. Since these can reduce your overall tax debt, it is important to file within this limited timeframe to reap the benefits of this resource.
As mentioned, one of the most common reasons individuals hold off claiming the HST input tax credit is because they know they will have to pay. If you are in this position, and are worried that even if you take into account input tax credits, you still can’t pay, then you have to look at the other options available for payment.
Why not just leave it unfiled? Well, HST is trust money so the Canada Revenue Agency is that much more aggressive when it comes to collecting. They will want to be paid in full right away, or over a very short term.
What you can do:
Do you have the ability to pay in full, or over a 6-month term? If so, then you don’t have a problem. Negotiate a payment plan and wipe the debt clean.
Do you own a home with equity? If so, perhaps using that equity to refinance and get a mortgage to pay the tax debt makes the most sense. A second mortgage, structured more like a loan than a mortgage with an amortization period of 20-25 years, can mean a small monthly payment that settles the debt and gets the CRA off your back.
However, if the answer to these questions is no, you may want to talk to a financial counsellor about government programs that you can leverage to protect yourself from CRA enforcement while they negotiate a payment arrangement you can afford.
At DebtCare, we have the knowledge and experience that makes settling that debt simple.
Want to discuss all of your options? Call us today at 1-888-890-0888.