GST Instalment Threshold Change
Yes, there is such a thing as good tax news!
In addition to lowering GST rate from 6% to 5%, effective January 1, 2008:
The GST/HST threshold for quarterly instalment payments will be increased from $1,500 to $3,000. If you are an annual filer whose net tax for a fiscal year is less than $3,000, you will not need to make quarterly instalment payments throughout the next fiscal year. – Revenue Canada
Don’t let the word “increased” scare you. This is actually good news! Our GST payable (after deductions) is typically between $3-5K, which easily exceeded the $1,500 threshold. We were forced to either do one big prepayment before filing the GST return so the tax payable would be under $1,500, or suffer through the quarterly instalment payments.
Instalments are not a problem, really, but they are a hassle. And if you’re late with one of the instalments, you’ll be penalized. You’re potentially setting yourself up for 3 penalty occasions a year. I always opted for the prepayment option, which is a much smaller hassle: just 1 extra check and 1 extra form to fill out.
This year we have a bunch more ITC’s (input tax credits), so the GST payable may very well be right under the $3,000 threshold.
In conclusion, while this change doesn’t directly mean tax savings, this little change has the potential to make lives a bit easier.