Do you understand the concept of instalments?

They are essentially partial payments of taxes that most businesses must make at monthly or quarterly intervals.

According to income tax legislation, companies are required to pay these instalments in order not to receive preferential treatment compared to other taxpayers whose taxes are withheld at source.

Let's find out which businesses need to make GST and QST instalment payments, as well as the appropriate time and method to do so.

Which businesses are affected by GST and QST instalment payments?

Not all businesses are required to make instalment payments. It is therefore important to understand the tax rules in order to know the specific obligations of your company.

The businesses concerned by the GST and QST instalments are those whose total amount of tax and capital tax each exceeds $3,000. This does not take into account the countervailing tax of financial institutions. The same rule applies to the QST.

Corporations with less than $3,000 in tax balances at both the federal and provincial levels for the previous or current year are not required to make instalment payments. This exemption also applies to newly incorporated corporations or corporations in the first year of operation.

Since the QST rate (9.975%) is higher than the GST rate (5%), you may have to make instalment payments for the QST, even if it is not necessary for the GST.

Calculation of instalments, how does it work?

There are three ways to accurately calculate the instalment amounts to be paid:

• The no-calculation method is recommended if your income, deductions, and credits are relatively constant from year to year.
• The previous year method is appropriate when your current year's income, deductions, and credits are similar to the previous year's, but significantly different from two years ago.
• The current-year method is appropriate when your current-year income, deductions, and credits differ significantly from year to year.

You can use form VDZ-458.0.2-V to calculate QST instalment payments and Form FPZ-558. C for GST and QST.

When do you have to make instalment payments?

Regarding GST and QST, businesses eligible for instalment payments must make four payments per year if they have an annual reporting period, and twelve payments per year if the reporting period is monthly.

These payments must be made no later than one month after the end of each quarter of your fiscal year. At the end of the year, when you file your return, you compare the total of the instalments calculated with the actual net amount of GST and QST you have to remit.

Since business taxation in Quebec is complex, it is recommended to get help from an accountant to determine the amounts to be paid in instalments.

What are the methods of payment of instalments?

There are three payment methods for making instalment payments:

• Online payment: Businesses can make remittances online using a financial institution's online payment service. If you are reporting the GST and QST separately, you will need to use the code on the remittance slip.
• In-person payment: You also have the option of going to the counter of a financial institution to make the payment directly.
• Payment by mail: Finally, you can mail the GST/HST and QST instalment payment form and remittance form. You can request these forms from Revenu Québec's customer service.

Don't forget to report your instalments

When you file your GST and QST return, be sure to indicate the total amount of instalments you paid during the year.

How to find an accountant to help you process instalments?

Since many businesses in Quebec must make GST and QST instalment payments, it is essential to meet these obligations four to twelve times a year, or face additional penalties and interest.

Because of the rigor and organization required, many companies rely on accountants to calculate and make these payments in a timely manner.

So don't hesitate to contact us if you want to find an accountant adapted to your reality as entrepreneurs to help you in this process. https://www.bankeo.ca/