Canada revenue agency provides certain small businesses with an option to use Quick Method to calculate GST/HST remittances (instead of regular GST/HST reporting method). This method requires a reduced amount of documentation and allows an easier calculation of the GST remittances.
For applicable registrants of the GST quick method, they continue to charge their clients GST at the regular rate of 5% or HST ( at applicable rates based on the province of the business) on the taxable supply of property and services. To calculate the amount of GST/HST to remit, the registrant will multiply the respective revenue with the reduced amount of quick method remittance rates. These rates are dependent on if the business is offering goods for resale or services.
Input Tax Credits (ITCs) cannot be claimed on most of the purchases made within the year. A business is entitled to claim a 1% credit on the first $30,000 of revenue from your eligible supplies on which it collects the GST at 5% or HST at the applicable rate in each fiscal year. For 1% credit to be applicable, a quick method election must be in effect at the beginning of a fiscal year or in case of a new registrants, it is applicable from the day the business became a registrant.
A business can choose to use the quick method if all the following conditions are met:
- You have a permanent establishment in Canada.
- Business has continuously been active throughout-365 days period ending immediately before the current reporting period.
- An election of the quick method or the simplified method for claiming ITCs during that 365-day period was not revoked.
- Business type is not specifically included under Exceptions:
- A person providing bookkeeping, financial, tax, legal, accounting, or actuarial services.
- listed financial institutions
- public institutions
- non-profit organizations at least 40% government funding
- Public colleges, school authorities or universities, that are operated other than profit
- Hospital authorities, facility operators, or external suppliers.
- Business’s revenue from annual worldwide taxable supplies, (including zero-rated supplies) and those of your associates, are not more than $400,000 for either the period consisting of the first/last four consecutive quarters out of your last five fiscal quarters.
A business can take advantage of using the Quick Method of GST as described above, to complete an analysis of your business if it meets the criteria listed above, please contact us.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2022 Shajani LLP.
Shajani LLP is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.