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If you’re behind on bookkeeping, start with the months that trigger a filing or a remittance, and leave the rest for later. A GST/HST return that’s six months late with $5,000 owing adds a $125 penalty before interest. Catch-up work is boring, but it’s rarely as bad as it feels on day one.
What should you fix first?
Anything with a deadline attached. That means GST/HST returns, payroll deductions you owe the CRA, and your income tax return. Everything else, like tidy categories or old petty cash, can wait a week.
Make a short list before you touch a single receipt. Write down which periods are open, which returns are late and what you owe for each. If you don’t know what you owe, that’s your first job.
How much does a late GST/HST return cost?
Here’s how the CRA builds the penalty. Take 1% of what you owe. Add a quarter of that figure again for each complete month of delay, and stop counting after 12 months. No penalty applies if you owe $0 or the CRA owes you. Interest is separate and keeps running. We worked the formula out for a return with $5,000 owing.
| Months late | Penalty on $5,000 owing |
|---|---|
| 1 | $62.50 |
| 3 | $87.50 |
| 6 | $125.00 |
| 12 | $200.00 |
The cap is 4% of what you owe. On a bigger balance the number climbs quickly, so file even when you can’t pay in full. Filing stops the monthly penalty from growing, though interest on the unpaid tax carries on. In extraordinary circumstances the CRA can cancel or waive a penalty, but you have to ask.
How do you catch up on books step by step?
Work oldest to newest. Get bank and card statements for every month you missed, since the bank has copies even when your desk doesn’t. Import them into your software, match each line to a receipt or invoice, and flag the gaps.
Sort out three things in this order.
- Sales and the tax you collected
- Expenses and the tax you paid
- Payroll, if you have staff
Then reconcile each month’s ending balance to the statement before moving on. A single wrong month will throw off every month after it. If you have staff, the payroll remittance calculator tells you what should have gone to the CRA. Sales tax is the next stop, and the GST/HST calculator lets you check a total in seconds.
What does a missing receipt cost you?
More than the receipt. In Ontario, $1,000 of expenses carries $130 of HST, so a $10,000 pile of undocumented purchases could hide $1,300 of tax you may not be able to claim back. We got that from the GST/HST calculator’s Ontario rate of 13%. Whether an input tax credit is allowed with a missing receipt is a rule to check with the CRA or your accountant.
Ask the supplier for a copy first.
The CRA says you must keep records for six years from the end of the last tax year they relate to, and you’re responsible for them even when a bookkeeper keeps them for you. Records can be electronic. The CRA page doesn’t say what to do when records are lost, so for that you’d need to phone the CRA.
Should you hire someone to clean it up?
If it’s more than a quarter behind, probably yes. If you’re a sole proprietor with a few dozen transactions a month, you can likely do it yourself over a weekend. We can’t tell you what a bookkeeper charges, and any quote you get should be in writing. Ask what’s included, how long it takes and whether they’ll file the returns. Then check they’ve handled catch-up work before.
For the tax side, the self-employed tax calculator shows how much of your profit goes to tax. It leaves out EI, so add that yourself if it applies. The tax instalments calculator is handy when you’ve missed those as well.
Mistakes when you’re behind
Guessing a number is the worst one. A wrong return can draw a penalty of its own, and the CRA also has a separate penalty for wrong figures on an e-filed GST/HST return, with a floor of 5% and a ceiling of 10% of the error. Another mistake is to wait until every month is perfect before filing the oldest one. And avoid mixing new bookkeeping into the old backlog, because you’ll lose track of which pile is which.
Limits: our table assumes one return and full months. Partial months don’t count, and your own return may have refunds or credits that change the amount owing.
Where the numbers come from
Penalty rules and the six-year record-keeping requirement come from Canada Revenue Agency pages on GST/HST filing penalties and keeping records, read on 30 September 2026. The Ontario rate comes from our GST/HST calculator. This website has no connection with the CRA or any other government body.
Frequently asked questions
Can I file a GST/HST return before my books are perfect?
Yes, and it is usually wise to file the oldest late return first. Use your best supported figures and correct later if you find an error.
How long do I need to keep business records?
Six years from the end of the last tax year they relate to, unless the CRA gives you permission to dispose of them sooner.
Is there a penalty if I owe nothing?
Not for late filing of a GST/HST return. No late-filing penalty applies when you owe $0 or the CRA owes you a refund.
Can I ask the CRA to cancel a penalty?
In some extraordinary circumstances the CRA may cancel or waive penalties and interest. You have to apply through its formal process.
Do I have to use special software to catch up?
No. Any system works if it can import bank statements and match them to receipts, but you stay responsible for the records even if someone else keeps them.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST
- Ontario income tax and sales tax in 2026
How Ontario income tax works in 2026: the five brackets, the surtax and health premium, the 13% HST, and the calculators that switch to Ontario
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.