In general, a GST/HST registrant is required to report and remit the net of GST/HST collected on sales less GST/HST paid on eligible business expenses (Input Tax Credits). There is, however, an alternative method of reporting and remitting GST/HST that, for some businesses, may simplify your life and save you money.
The Quick Method of Accounting
The Quick Method of accounting is intended to help small businesses calculate their GST/HST remittances without having to separately track input tax credits.
Generally, any business with worldwide annual revenues of less than $200,000 may use the Quick Method of accounting. There are a number of exceptions including accountants and bookkeepers, financial consultants, lawyers, and actuaries to name a few.
If you are a retailer or wholesaler and buy goods for resale and your cost of goods sold in the previous fiscal year exceeded 40% of your gross revenues special remittance rates may apply.
For businesses operating outside of HST provinces the general remittance rate is 4.3% of revenues (including GST) with a 1% credit on the first $30,000 of revenues.
To illustrate the impact of the Quick Method the following table was taken from actual results experienced by one of our clients:
GST Liability - Traditional Method |
|
| Sales | $106,150.00 |
| GST on Sales (6%) | $6,369.00 |
| GST ITCs | $341.35 |
| GST Payable | $6,027.65 |
GST Liability - Quick Method |
|
| Sales (including GST) | $112,519.00 |
| GST Payable @ 4.3% | $4,838.32 |
| Less: 1% Credit | -$300.00 |
| GST Payable | $4,538.17 |
As you can see, not choosing the optimal method can be costly.
For more information please call (613) 727-3845 or e-mail: info@robertson-sharpe.com
