HST Filing and Corporate Tax: How They Work Together
Running an incorporated business in Ontario means dealing with more than just corporate tax filing. If your annual revenue exceeds $30,000, you’re also required to register, collect, and remit HST (Harmonized Sales Tax). While corporate tax and HST are two separate obligations, they often overlap—and understanding how they work together is crucial for staying compliant and avoiding penalties.
At Mak Tax & Accounting Services, we work with small, medium, and large businesses across Scarborough, Toronto, and the GTA to simplify corporate tax filing and HST reporting. With our support, business owners don’t just stay compliant—they save time, money, and stress.
This guide explains the connection between HST filing and corporate tax in Ontario, what business owners need to know, and how Mak Tax can help.
What Is HST and Who Needs to File?
The Harmonized Sales Tax (HST) is a combination of the federal GST (Goods and Services Tax) and the provincial sales tax. In Ontario, the HST rate is 13%. Businesses that provide taxable goods and services must charge HST on sales once their annual revenue exceeds $30,000.
Key Points:
You must register for HST once you cross the $30,000 threshold.
HST collected from customers is not business income—it belongs to the government.
Businesses can claim Input Tax Credits (ITCs) to recover HST paid on eligible expenses.
You stay eligible for Ontario benefits like the Ontario Trillium Benefit (OTB).
Mak Tax Advantage:
With our HST Filing Services, we help Scarborough and Toronto businesses register, file returns, and maximize ITCs.
What Is Corporate Tax?
Corporate tax is the income tax paid by incorporated businesses in Canada. It applies to net income after deducting expenses. All incorporated businesses must file a T2 Corporate Tax Return annually, even if there’s no income.
Corporate Tax Basics:
Filing deadline: 6 months after your fiscal year-end.
Taxes payable: 2 or 3 months after your year-end, depending on corporation type.
Small Business Deduction (SBD): Eligible Canadian-controlled private corporations (CCPCs) can access reduced rates on the first $500,000 of active business income.
Mak Tax Service Tie-In:
Our Corporate Tax Filing Services ensure businesses across Ontario file accurately, meet CRA deadlines, and claim all eligible deductions.
How HST Filing and Corporate Tax Work Together
Though HST and corporate tax are separate, they influence one another in key ways:
1. Impact on Cash Flow
HST collected from clients is not revenue—it’s a liability. If business owners mistakenly treat it as income, they may overestimate profits and face cash flow problems when it’s time to remit HST.
Mak Tax Advantage:
Through our Bookkeeping Services, we help Ontario businesses separate HST from actual income so financial statements are accurate.
2. Input Tax Credits (ITCs) and Expenses
When filing HST, businesses can claim ITCs to recover the HST paid on eligible expenses. These expenses—net of HST—are also used when calculating corporate taxable income.
You purchase $1,130 in supplies ($1,000 + $130 HST).
The $1,000 counts as a deductible expense for corporate tax.
The $130 can be recovered as an ITC on your HST return.
Mak Tax Service Tie-In:
Our Tax Planning Services ensure you don’t miss ITCs, reducing both HST payable and taxable income.
3. Recordkeeping
Accurate HST records are essential for both HST returns and corporate tax filing. The CRA often reviews HST filings, and discrepancies may trigger a corporate tax audit.
Mak Tax Advantage:
With our Bookkeeping and Audit Support Services, Scarborough businesses stay organized and audit-ready.
4. CRA Compliance
Late or incorrect HST filings can lead to penalties and interest. If the CRA audits your HST account, they may also review your corporate tax filings. Proper alignment between the two is critical.
Mak Tax Service Tie-In:
We provide CRA Representation Services to protect businesses in Toronto and the GTA during reviews or audits.
How HST and Corporate Tax Interact
Let’s say your incorporated business earns $200,000 in revenue in a year.
HST Collected: $26,000 (13% of $200,000).
Expenses (before HST): $50,000.
HST Paid on Expenses: $6,500.
Common Mistakes Businesses Make
1- Not registering for HST on time once revenues pass $30,000.
2- Mixing HST with revenue, leading to cash flow problems.
3- Failing to claim ITCs for eligible expenses.
4- Missing filing deadlines, resulting in penalties.
5- Poor recordkeeping, which increases audit risks.
Mak Tax Advantage:
Our Full-Service Accounting Solutions prevent these issues by managing HST, bookkeeping, and corporate tax in one place.
Benefits of Professional Help
While some business owners try to manage HST and corporate tax themselves, professional guidance ensures compliance and maximizes savings. Benefits include:
Accurate calculations of HST payable and ITCs.
Proper alignment of HST and corporate tax returns.
Time savings for business owners.
Representation in case of CRA reviews.
Mak Tax Service Tie-In:
Our team offers Corporate Tax Filing, HST Filing, Payroll, and Advisory Services, giving Scarborough and GTA businesses a complete solution.
How Mak Tax Helps Businesses in Ontario
At Mak Tax & Accounting Services, we provide end-to-end support for businesses of all sizes:
Corporate Tax Filing (T2 Returns) – Accurate, on-time returns.
HST Filing – Registration, return filing, and ITC optimization.
Bookkeeping Services – Year-round organization of income and expenses.
Payroll & WSIB Filing – Reliable compliance for businesses with employees.
Tax Planning & Advisory – Strategies to reduce overall tax burdens.
Audit Support & CRA Representation – Professional defense if CRA reviews your file.
By offering all these services under one roof in Scarborough, we simplify business finances for clients across Toronto and the GTA.