Last Reporting Period
When you cancel your GST and QST registration, you have a last reporting period that ends on the day before the day the cancellation is effective. You must file the return for the last reporting period no later than one month after the end of the period.
A person registered for the GST and QST with an annual reporting period (January 1 to December 31) stops carrying on commercial activities on October 31, 2019. The person uses form LM-1.A-V to cancel their registration effective November 1, 2019. We confirm the effective date of the cancellation in writing.
As of November 1, 2019, the person is no longer required to collect GST and QST on their taxable sales and can no longer obtain an input tax credit (ITC) and an input tax refund (ITR). The person must file their final return for the period from January 1 to October 31, 2019, no later than November 30, 2019.
Property held at the time of cancellation
If you cease to be a registrant, you are considered to have sold all property intended for consumption, use or sale in the course of commercial activities. However, different rules apply to capital property, non-capital property, and services and rental property.
Capital property
You are deemed to have ceased to use your capital property in the course of your commercial activities immediately before cancelling your registration and to have sold the property and collected the GST and QST. As a rule, the taxes are equal to the basic tax content of the property at the time of the change in use.
In September 2015, a person registered for the GST and QST bought office furniture at a cost of $5,000, plus $250 GST and $498.75 QST. Since the furniture is for use in commercial activities, the person was able to claim an input tax credit (ITC) and an input tax refund (ITR) for the taxes paid.
On June 30, 2017, the person cancelled their registration. The person still owns the furniture and is therefore considered to have sold it and collected the taxes immediately before cancelling their registration. On that date, the furniture's fair market value (FMV) was $2,500 for both GST and QST purposes.
| Calculation of taxes to be remitted | GST | QST | ||
|---|---|---|---|---|
| Taxes paid at time of acquisition | $250.00 | $498.75 | ||
| Taxes paid on improvements | + | $0.00 | + | $0.00 |
| Refund or rebate | – | $0.00 | – | $0.00 |
| Total | $250.00 | $498.75 | ||
| FMV / Total acquisition cost of property and cost of improvements: $2,500/($5,000 + $0.00) |
x | 0.50 | x | 0.50 |
| Taxes to be remitted | $125.00 | $249.38 | ||
Non-capital property
You are deemed to have sold all your non-capital property for a price equal to its fair market value (FMV) immediately before you ceased to be a registrant and to have collected the GST and QST calculated on the FMV.
A person ceased to be registered for the GST and QST on April 30, 2017, and had an inventory of unsold computers with an FMV of $8,000 for both GST and QST purposes.
GST and QST calculated on the FMV must be included in the net tax payable for the person's last reporting period as a registrant. The GST payable is $400 ($8,000 × 5%). The QST payable is $798 ($8,000 × 9.975%).
Services and rental property
If a service is being rendered or property is being leased over a period that extends beyond the date when you cease to be a registrant, you are entitled to an input tax credit (ITC) and an input tax refund (ITR) solely for the period during which you were a registrant. The GST and the QST must be prorated.
On April 15, 2017, a person received an invoice for advertising services covering the period from April 15 through May 14, 2017. The cost of these services was $500, including $25 GST and $49.88 QST. An ITC and an ITR were claimed for the taxes paid.
On May 1, 2017, the person ceased to be a registrant. The person has to add, to the net tax payable, the ITC and the ITR claimed for the portion of the advertising services attributable to the period after registration was cancelled. The GST payable is $11.67 ($25 × 14/30). The QST payable is $23.28 ($49.88 × 14/30).
If goods and services covered by the ITR restrictions for large businesses were acquired between December 31, 2017, and January 1, 2021, the QST to remit must be adjusted to take into account the year of acquisition. For example, the QST to remit for property acquired in 2018, which gives entitlement to a 25% ITR, is equal to 25% of the QST calculated on the FMV or the basic tax content.