For a business owner, collecting and remitting sales tax, both GST and PST, is annoying enough without discovering that you may have been inadvertently overpaying the Canada Revenue Agency (CRA).
"The overpayment of sales tax happens for a variety of reasons," says Andrew Adolph, CPA CGA and General Manager of AHS Tax Group. "It can be due to a simple clerical error, lack of knowledge, or a software error. The key is to locate the error, fix it, and claim back any overpaid tax."
Andrew offers these three simple tips to make sure the CRA doesn’t owe you a sales tax refund:
1. Review sales tax remittances for the past four years
"People often don't realize that the time limitation for claiming a refund for overpaid taxes is four years," Andrew notes. "We review your data for both GST and PST for the previous four years and then we can file a claim for anything you're due. Keep in mind that going back four years could mean a substantial recovery."
2. Pay attention to cross border transactions
"Ideally," Andrew says, "you'll be asking a GST and PST expert, such as AHS Tax Group, to help you structure your cross border transactions to make sure that you're eligible for any rebates. It's important to identify the correct legal claimant and to make sure that every transaction will stand up to CRA scrutiny."
3. Check supplier invoices for sales tax
"Overpayments can occur for a number of reasons," Andrew explains. "But the biggest cause is usually not being able to easily identify the GST amount on a supplier invoice. We’ve found that not all supplier invoices clearly show the amounts paid. This makes it difficult to identify any GST amounts that are reimbursed to employees or volunteers, for example. A GST rebate can be claimed on reimbursements. It doesn't take long for these usually small amounts to add up."
Andrew and his colleagues at AHS Tax Group have a combined history of over 75 years of working for CRA.
"We're sales tax specialists," Andrew says. "We can come in and look at your data and we can tell if there's overpaid sales tax there. If we don't find anything, you don't pay anything."