What are tax instalments for GST and QST?

Do you understand the concept of tax instalments?

They're basically partial tax payments that most businesses need to make monthly or quarterly.

Income tax laws state that businesses must make these payments. This is to ensure they don't get special treatment compared to other taxpayers whose taxes are withheld at the source.

Let's find out which businesses need to make GST and QST instalment payments, and the right time and way to do it.

Which businesses are affected by GST and QST instalments?

Not all businesses have to make instalment payments. So, it's important to understand the tax rules to know your business's specific obligations.

Businesses that need to pay GST and QST instalments are those whose total income tax and capital tax each exceed $3,000. This doesn't include the compensatory tax for financial institutions. The same rule applies to QST.

Companies with a tax balance under $3,000, both federally and provincially, for the previous or current year don't have to make instalment payments. This exemption also applies to newly formed companies or those in their first year of operation.

Since the QST rate (9.975%) is higher than the GST rate (5%), you might need to make QST instalment payments even if it's not required for GST.

How do estimated tax payments work?

There are three ways to accurately calculate your estimated tax payments:

• The 'no calculation' method is recommended if your income, deductions, and credits stay pretty consistent year after year.
• The 'previous year' method is a good fit when your current year's income, deductions, and credits are similar to last year's, but pretty different from two years ago.
• The 'current year' method is the way to go if your income, deductions, and credits vary a lot from year to year.

You can use form VDZ-458.0.2 to calculate your QST estimated payments, and form FPZ-558.C for GST and QST.

When do you need to make your estimated payments?

For GST and QST, businesses that need to make estimated payments have to make four payments a year if they file annually, or twelve payments a year if they file monthly.

You need to make these payments no later than one month after each quarter of your financial year ends. Then, at the end of the year when you file your return, you'll compare the total estimated payments you made with the actual net GST and QST you owe.

Since business taxes in Quebec can be pretty complex, it's a good idea to get help from an accountant to figure out how much you need to pay in estimated taxes.

How can you pay your estimated tax payments?

There are three ways to make your estimated tax payments:

• Online Payment: Businesses can make payments online using their financial institution's online payment service. If you're filing GST and QST separately, you'll need to use the code shown on your payment slip.
• In-Person Payment: You can also head to a financial institution's counter to make your payment directly.
• Payment by Mail: Lastly, you can mail in your payment slip and the GST/HST and QST estimated payment form. You can ask Revenu Québec's customer service for these forms.

Don't Forget to Report Your Estimated Payments

When you file your GST and QST return, make sure to include the total amount of estimated payments you made during the year.

How to Find an Accountant to Help You with Estimated Tax Payments?

Since many businesses in Quebec need to make estimated GST and QST payments, it's really important to meet these obligations four to twelve times a year. Otherwise, you could face extra penalties and interest.

Because it takes careful attention and good organization, many businesses hire accountants to calculate and make these payments on time.

So, feel free to reach out if you want to find an accountant who really gets your entrepreneurial journey and can help you through it. https://www.bankeo.ca/