Understanding GST HST and Payroll Records Essential Guide for Canadian Businesses
- MP ACCOUNTING
- Dec 24, 2025
- 3 min read
Keeping accurate records for GST/HST and payroll is a critical responsibility for Canadian businesses. These records not only ensure compliance with tax laws but also help avoid costly errors and audits. This guide explains what you need to know about maintaining GST/HST and payroll records, with practical tips to keep your business organized and compliant.
What Are GST/HST Records and Why Are They Important?
GST (Goods and Services Tax) and HST (Harmonized Sales Tax) are taxes applied to most goods and services in Canada. If your business operates in Canada and you file GST/HST returns, you must keep detailed records. These records help you:
Calculate the GST/HST you owe or need to collect
Determine the amount eligible for refunds, rebates, or deductions
Support claims for input tax credits (ITCs)
When You Need to Keep GST/HST Records
You must keep GST/HST records if you:
Run a business or engage in commercial activities in Canada
File GST/HST returns regularly
Apply for GST/HST rebates or refunds
What Your GST/HST Records Should Include
Your records must describe goods and services clearly enough to show whether GST/HST applies. This means including:
Detailed descriptions of goods or services sold or purchased
Dates of transactions
Amounts charged or paid, including GST/HST amounts
Copies of invoices, receipts, or written agreements
Input Tax Credits and Supporting Documents
If you claim input tax credits for GST/HST paid on business purchases, keep copies of purchase invoices or receipts. These documents must include:
Vendor’s name and GST/HST registration number
Date of purchase
Description of goods or services
Amount paid, including GST/HST charged
Providing this information on your sales invoices helps your customers who are also GST registrants claim their credits.
Payroll Records You Must Keep
Payroll records are essential if you deduct income tax, Canada Pension Plan (CPP) contributions, or Employment Insurance (EI) premiums from employee pay. These records must include:
Hours worked by each employee
Amounts withheld for CPP contributions, EI premiums, and income tax
Records of remuneration paid, including salaries, wages, bonuses, and commissions
Additional Documents to Maintain
Besides payroll summaries, keep:
Employee information such as names, addresses, and social insurance numbers
Records of any benefits or allowances paid
Records of any adjustments or corrections made to payroll
Accurate payroll records help you prepare reports for the Canada Revenue Agency (CRA) and resolve any discrepancies.
Best Practices for Maintaining GST/HST and Payroll Records
Organize Your Records Clearly
Use a consistent system to file invoices, receipts, and payroll documents. Digital record-keeping software can simplify this process and reduce errors.
Keep Records for the Required Period
The CRA requires you to keep GST/HST and payroll records for at least six years from the end of the last tax year they relate to. This period allows for audits or reviews.
Regularly Reconcile Your Records
Check your GST/HST returns against your records to ensure accuracy. Similarly, reconcile payroll deductions with remittances made to the CRA.
Use Clear Descriptions and Dates
Avoid vague entries. For example, instead of “services,” specify “consulting services for website development.” Include exact dates to track transactions properly.
Back Up Your Records
Keep digital backups in secure locations to prevent loss due to hardware failure or disasters.
Examples of GST/HST and Payroll Record Entries
GST/HST Invoice Example:
Invoice #1234
Date: March 15, 2024
Description: Office supplies – printer paper and ink cartridges
Amount: $200.00
GST/HST (13%): $26.00
Total: $226.00
Payroll Record Example:
Employee: Jane Doe
Pay Period: April 1–15, 2024
Hours Worked: 80
Gross Pay: $2,000.00
CPP Deducted: $100.00
EI Deducted: $30.00
Income Tax Deducted: $300.00
Net Pay: $1,570.00
Final Thoughts on Managing GST/HST and Payroll Records
Maintaining clear and accurate GST/HST and payroll records is essential for Canadian businesses. These records support your tax filings, help you claim credits and rebates, and ensure compliance with CRA requirements. By organizing your documents, keeping detailed descriptions, and regularly reviewing your records, you reduce the risk of errors and audits.
If you are unsure about your record-keeping practices or need help setting up a system, consider consulting a professional accountant. Staying on top of your GST/HST and payroll records protects your business and gives you peace of mind.
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