Not all businesses have to file Harmonized Sales Tax (“HST”) remittances. For those which do, they can be a valuable source of information in the claims process…especially when other documentation was destroyed or is incomplete. The key is to know what the remittances tell you.
A little about HST Remittances
All businesses whose sales exceed $30,000 annually are required to register with Canada Revenue Agency (“CRA”) for the purposes of collecting and remitting HST.
In preparing an HST remittance, a business is also permitted to claim tax credits for the HST they paid to others on purchases made by the business for expenses such as inventory and supplies. As a result, it is beneficial for all businesses to register for HST, not only businesses with sales in excess of $30,000 annually.
Depending on the sales levels of a business, CRA requires remittances to be filed either annually, quarterly (every 3 months), or monthly. The higher the revenues of the business the more frequently they will be required to file HST.
How an HST remittance is used in a claim
In the event of an insurance claim, HST remittances can be a valuable source of information. Line 101 of the HST Remittance will list all revenues of the business during the period the remittance covers. Regardless of whether a particular stream of revenue is tax exempt, it must still be reported on line 101 of the remittance. This information will allow for reconciliation between other sales records provided for purposes of a claim.
If needed, adjustments for sales which are HST exempt are made on subsequent lines of the HST remittance.
The filing date is also of great value. The remittance indicates the date on which the document was filed and assessed. Records prepared prior to a loss are often considered more credible, and as such, determining if the income was reported on time and prior to the occurrence of the loss is of value.
Finally, in the event the Insured contends that all documentation regarding the sales of a business was destroyed in a loss incident such as a fire, copies of historical HST remittances can be obtained from CRA with only a few weeks wait time. This may prove to be a valuable alternate source for records, outlining revenue, in the event of a loss.
Final Thoughts
HST remittances don’t provide the detail you may find from other source documentation. But in situations where nothing further is available, or as a means of confirming the completeness and accuracy of other records provided, HST remittances can be a valuable resource in the claims process.