How are GST penalties calculated for your business?

There are a few criteria which trigger the calculation of GST penalties to your business:

  1. Failure to file your GST return
  2. Demand by CRA to file your GST return
  3. Failure to file your GST return electronically
  4. Failure to accurately report your GST transactions

Failure to file your GST return

The penalty is calculated as follows: 1% of the total amount owing + 25% of the amount owing, multiplied by the number of months the return is overdue – up to a maximum of 12 months.

Example: GST Owing amount of $10, 000 on June 01. 

1% of $10, 000 is, $100
25% of $10, 000 is, $2500

If you are 3 months late in paying the owing amount, it is calculated as such:

$10, 000 + 3($2500) + $100 = $17, 600 owing

Demand by CRA to file your GST return

The penalty is calculated as follows: Total GST owing + $250. Then 1% of the new amount owing + 25% of the new amount owing, multiplied by the number of months the return is overdue – up to a maximum of 12 months.

Example: GST Owing amount: $10, 000

Demand Penalty: $250

New Amount: $10, 250

1% of $10, 250 is, $102.50
25% of $10, 250 is, $2562

If you are 3 months late in paying the owing amount, it is calculated as such:

$10, 250 + 3($2562) + $102.50 = $18, 038.50 owing

Failure to file your GST return electronically

If you are required to file your GST return electronically and fail to do so, a $100 penalty is applied for the initial failure. Going forward, should you continue to fail filing your GST return, the penalty is $250 per occurrence.

The penalty for an initial failure is calculated as follows: Total GST owing + $100. Then 1% of the new amount owing + 25% of the new amount owing, multiplied by the number of months the return is overdue – up to a maximum of 12 months.

Example: GST Owing amount: $10, 000

Failure Penalty: $100

New Amount: $10, 100

1% of $10, 100 is, $101
25% of $10, 100 is, $2525

If you are 3 months late in paying the owing amount, it is calculated as such:

$10, 100 + 3($2525) + $101 = $17, 776 owing

Failure to accurately report GST transactions

The penalty is calculated exactly as per the Failure to file your GST return criteria. Click here to view.

If you need assistance with late GST return(s), or want consultations on your GST & Corporate tax planning, reach out today for a consultation.

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