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I have a couple thousand dollars of HST compensation to declare on my Ontario Income Tax for a sole proprietor business, but I am not sure specifically how to declare the amount on my taxes as income or when I need to claim.

I had not filed for 2013 and 2014. Do I send the amount in as an adjustment to the income tax return for 2013, or can I claim the whole amount on 2015 tax return as I just received the HST assessment February 2015?

Thank you for your time and assistance.

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  • What do you mean by "HST compensation"? Do you mean that you charged HST on goods or services you sold, but haven't remitted any part of that HST back to the government yet?
    – Chris W. Rea
    Commented Feb 20, 2015 at 14:43

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Your income and expenses for the business should be independent of HST. That is, if you charged somebody 100 + 13 HST, you have revenue of 100. You're going to send the 13 to the government later, it's not part of your revenue. If you go out and buy something for 10 + 1.30 HST, you record 10 as an expense. You're going to take the 1.3 off the 13 you would have sent the government, it's not part of your expenses. And so on.

I am not sure what you mean by "HST compensation" but if it came from the government, and it needs to be declared as income, there will be information to that end in the letter that comes with the cheque. (For example, if they pay you interest on your refund, the letter reminds you to include that money in next year's income.)

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