What to take away
- Separate sales revenue from the tax included in customer payments.
- A reserve account supports planning; it does not calculate the return.
- Review registration, tax coding and supporting purchase records.
Separate the components of a customer payment
An invoice may contain the price of the supply and an amount for sales tax. Receiving them together does not make both amounts income available to the owner. Your records should preserve the components so the tax position can be explained.
The applicable treatment depends on the transaction. Ontario businesses can have supplies with different place-of-supply or tax-status considerations. Confirm the right tax codes rather than using one default for every customer.
Understand what eligible purchase tax changes
An eligible registrant may recover GST/HST on qualifying business purchases through input tax credits. That can affect the net tax position, but it does not mean every payment with a tax-looking amount supports a claim. Documentation and applicable limitations matter.
The business also needs to know which accounting method applies. Special methods and particular transactions can change how the return is calculated. Do not assume that subtracting all purchase tax from all customer tax will always give the correct filing result.
A reserve is a planning tool
Some owners transfer money to a separate account to keep an expected obligation visible. That can create useful spending discipline, but an arbitrary transfer percentage is not a tax calculation and should not be presented as one.
Review the reserve against reconciled records and the expected payment. If the books are incomplete, say so. A separate account containing a reassuring balance is not evidence that the return is accurate or fully funded.
Use a small example to identify the risk
Imagine a customer pays an invoice that includes an amount identified as sales tax. The business uses the full receipt for operating costs before reviewing the tax account. Even if the work earned a margin, a later tax payment may now require cash from other receipts.
This example illustrates earmarked commitments rather than recommending a reserve amount. The actual net tax depends on the business's transactions, eligible credits, adjustments and method. Start with the ledger, not a guessed percentage.
Put the filing period on the cash calendar
Confirm the reporting period and current filing and payment requirements. They are separate from corporate income tax and payroll schedules. Include the expected payment date in the forecast early enough to discuss a shortfall before it becomes urgent.
If sales are changing, review registration questions as well. The small-supplier analysis depends on the relevant supplies, associates and timing. Profit and one calendar-year bank-deposit total are not reliable substitutes for that analysis.
What to bring to the review
Bring the sales-tax reports, sales adjustments, purchase support and details of unusual transactions. Reconcile the relevant account balances and keep a list of items awaiting clarification. Ask which assumptions could change the expected amount.
The GST/HST guide and registration checker can help organize your questions. For missing earlier returns or uncertain tax codes, describe the issue to Sora so the work can be scoped around the records and periods that need attention.
Sources & editorial notes
Sources checked October 23, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- General information for GST/HST registrantsCanada Revenue Agency
- Input tax creditsCanada Revenue Agency
- GST/HST and payroll recordsCanada Revenue Agency
- When to register for and start charging GST/HSTCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.