Quick Method of Tax Accounting to calculate GST/HST for IT Consultants
January 14, 2019
The Quick Method:
The quick method is a simple way for small businesses to calculate the tax to be remitted to the CRA for GST/HST purposes. With the quick method, you still collect the HST at the 13% on taxable supplies of goods and services but will only remit 8.8% to CRA. The rest of the HST will be income for you.
The amount to be remitted to the CRA is calculated by multiplying a single applicable rate with the number of taxable supplies (including GST/HST). The remittance rate depends on either one of the following:
- If the taxpayer is in the service, retail or manufacturing business
- In which province the business has a permanent establishment
- In which province the supplies are services provided or supplies made
The Quick Method can be used by small businesses with taxable sales of $400,000 or less. However, this method is limited, as such, accountants, lawyers, and charities are prohibited from using this method of accounting. Therefore, in order to elect the Quick Method, you must complete and send From ‘GST74 – Election and Revocation of an Election to Use the Quick Method of Accounting’, to the Canada Revenue Agency. This form can be accessed and downloaded from the CRA website.
GTA Accounting will help you analyze the benefits of using the Quick Method of GST/HST for your business and also enable you to shift to it as per your business accounting needs so please do not hesitate to contact us.