GST/HST Quick Method

TheQuickMethodisasimplifiedaccountingoption availabletohelpsmallbusinessescalculatetheirnet taxforGST/HSTpurposes.ThismethodreducespaperworkandmakesiteasiertocalculateGST/HST remittancesandfileGST/HSTreturnsbecauseiteliminatesthe needtoreporttheactualGST/HSTpaid on mostpurchases.

 

When youusetheQuickMethod,youstillchargeyourcustomerstheGST/HSTattheapplicablerate(see thechartGST/HSTRatesbelow).However,you onlyneedtoremitaportionofthatGST/HSTtothe CanadaRevenueAgencywhenyouprepare yourGSTreturn.Thepartofthetaxthat youkeepunderthe QuickMethodaccountsfortheapproximatevalueoftheinputtaxcredits(ITCs) youwould haveclaimed forGST/HSTpaidon yourpurchasesifyouhadused theRegularMethodtoprepare yourGSTreturn. HoweverundertheQuickMethod,youareallowed toclaimITCsonpurchasesofrealproperty,capital property(suchascomputers,equipmentandvehicles),eligiblecapitalproperty, andimprovementsto thoseproperties.

 

Forexample,letsassumeABCCompanysofficeislocatedinBritishColumbiaandalloftheirsalesare madetocustomerslocatedinBritishColumbiaandtheyhaveelectedtousetheQuickMethodin2014 (seeWhocanmakethiselection?below).TocalculatetheamountofGST/HSTtoremitontheirGST return,they would multiplythetotalamountinvoiced (Sales+GST/HST)bytheQuickMethod remittanceratesthatappliedintheirsituation(seethechartWhataremyQuickMethodremittance rates?below).

 

IfABCCompanyhadbilled$100,000 forservicestheyprovided in2014, theywouldcharge5%GST (becausetheirofficeislocatedin BC and their customers are all locatedinBC)andwouldcollect

$105,000in totalfromtheircustomers. Iftheyhadnotpurchasedanyreal,capital,oreligible capital

property in 2015, thenet taxowing on their2014GSTreturn,wouldbecalculatedasfollows:

 

Totalbilled in2014(Sales+GST/HST)

$105,000

Line101

ApplicableQuickMethodRemittanceRate

x  3.6%

 

 

3,780

 

Less1% Creditonthe 1st$30000blled

   (300)

 

TotalGST/HSTCollected

3,480

Line103

GST/HSTPaid

   0

Line106

NetTaxOwing

 3,480

Line109

 

IfABCCompanyhadusedtheRegularMethodand theyhadnotpaidanyGST/HSTonpurchasesduring the year,theywouldhave reportedthefollowing ontheir2014GSTreturn:

 

TotalSalesin2014(notincludingGST/HST)

$100,000

Line101

ApplicableGST/HSTRate

x  5%

 

TotalGST/HSTCollected

5,000

Line103

GST/HSTPaid

   0

Line106

NetTaxOwing

 5,000

Line109

 

Byelecting tousetheQuickMethod, thecompanyhassaved$1,520in2014.


 

 

 

 

 

 

Who can make this election?

YoucanusetheQuickMethodifyou meetallofthefollowingconditions:

 

·  youhavebeeninbusinesscontinuouslythroughoutthe year(365days)OR youareanew registrantand youcanreasonablyexpect yourworldwidetaxablesuppliestobe$400,000orless in yourfirst full yearofbusiness(thelimitwas$200,000prior toJanuary1,2013);

·  youdidnotrevokeanelectionfor theQuickMethodduringthat 365-dayperiod;

·  youarenotapersonlistedunderExceptions,below; and

·  yourannualworldwidetaxablesupplies(includingGST/HSTandzero-ratedsupplies)including thoseofanyassociatedcompanyarenot morethan$400,000(thelimitwas $200,000priorto January 1,2013).Whenyoucalculate yourannualworldwidetaxablesupplies,excludesupplies offinancialservicesandsalesofrealproperty,capitalproperty,andeligiblecapitalproperty.

 

 

Exceptions

ThefollowingpersonscannotusetheQuickMethod:

  • ·  accountantsorbookkeepers;
  • ·  financialconsultants;
  • ·  lawyers(orlawoffices);
  • ·  actuaries;
  • ·  notariespublic;
  • ·  listedfinancialinstitutions;
  • ·  auditservices;
  • ·  taxreturnpreparersortaxconsultants;
  • ·  municipalities,orlocalauthoritiesdesignatedas municipalities;
  • ·  publiccolleges,schoolauthorities,oruniversities,establishedandoperatednot forprofit;
  • ·  hospitalauthorities;
  • ·  charities;and
  • ·  non-profitorganizationswithatleast40%governmentfunding in the year

 

 

HowdoyouelecttousetheQuickMethod?

 

ToelecttousetheQuickMethod,completeandsendFormGST74-ElectionandRevocationofan ElectiontoUsetheQuickMethodof Accounting, to your tax services office.

 

 

PLEASE NOTE

Thisisabriefsummaryof theQuickMethodrulesfordiscussionpurposesonly.Forthecompleterules, please refer toRC4058 QuickMethodofAccountingforGST/HST

http://www.cra-arc.gc.ca/E/pub/gp/rc4058/README.html.

 

Pleasecontactourofficeifyouwouldliketodiscusshowtherulesapply to your specificsituation.


  

GST/HST Rates

BritishColumbia,Alberta,Saskatchewan,Manitoba,Quebec,NorthwestTerritories,

NunavutandYukon

 

GSTat5%

NovaScotia

HSTat15%

Ontario,NewBrunswick,NewfoundlandandLabrador

HSTat13%

PrinceEdwardIsland

HSTat14%

 

 

Remittancerates for businesses that PROVIDE SERVICES

 

 

 

Yourofficeislocatedin:

 

 

 

BritishColumbia,Alberta,

Saskatchewan,Manitoba, Quebec,NorthwestTerritories, NunavutandYukon

 

 

NovaScotia

Ontario,New

Brunswick, Newfoundland andLabrador

 

Prince Edward Island

 

Yourcustomerislocatedin:

BritishColumbia,

Alberta,Saskatchewan, Manitoba,Quebec, NorthwestTerritories, NunavutandYukon

 

 

 

3.6%

 

 

 

1.4%

 

 

 

1.8%

 

 

 

1.6%

NovaScotia

12.0%

10.0%

10.4%

10.2%

Ontario,New Brunswick, Newfoundlandand Labrador

 

 

10.5%

 

 

8.4%

 

 

8.8%

 

 

8.6%

PrinceEdwardIsland

11.3%

9.2%

9.6%

9.4%

 

 

Remittancerates for businesses that PURCHASE GOODS FOR RESALE

 

 

Yourofficeislocatedin:

 

 

BritishColumbia,

Alberta,Saskatchewan, Manitoba,Quebec, NorthwestTerritories, NunavutandYukon

 

 

 

NovaScotia

 

Ontario,New Brunswick, Newfoundland andLabrador

 

Prince Edward Island

Yourcustomeris locatedin:

BritishColumbia,Alberta, Saskatchewan,Manitoba,

Quebec,Northwest Territories,Nunavutand Yukon

 

 

 

1.8%

 

 

0%(and

4.0%credit)

 

 

0%(and2.8% credit)

 

 

0%(and

3.4%credit)

NovaScotia

10.4%

5.0%

6.1%

5.6%

Ontario,NewBrunswick, NewfoundlandandLabrador

 

8.8%

 

3.3%

 

4.4%

 

3.9%

PrinceEdwardIsland

9.6%

4.2%

5.3%

4.7%