Net tax (GST/HST)

Net tax is the figure at the centre of every GST/HST return. A buyer or seller meets it when reconciling a target’s returns, checking that remittances were made, or asking whether credits were claimed correctly. The Excise Tax Act describes the net tax for a reporting period as a positive or negative amount determined by a formula in s. 225(1), subject to the rest of that Subdivision.

How it is worked out

• The CRA says to start with the GST/HST collected or collectible on taxable supplies made in the reporting period.
• Next comes the GST/HST paid or payable on business purchases for which input tax credits can be claimed.
• The difference, including any adjustments, is the net tax. It is either a remittance or a refund.
• Subsection 225(4) limits when an input tax credit may be claimed in a return, so ask whether any credits are still open.

What to ask

Compare each return’s net tax with the books behind it, and ask how any adjustment was reached. See how to check HST compliance when buying a business and the input tax credit entry. This entry covers the federal GST/HST rules only.