Are you a Canadian small business owner registered for GST/HST with annual taxable sales below $400,000? Is tracking your receipts a hassle? Does your business have minimal taxable expenses? The GST/HST Quick Method (we'll call it the "Quick Method") could be the solution you need to save tax and time.
If you answered YES to all, keep reading...
The Quick Method simplifies GST/HST remittances (payments) to CRA for eligible businesses, allowing you to remit (pay) a portion of the collected tax to the CRA instead of claiming the GST/HST paid on purchases as input tax credits. This approach is particularly beneficial for businesses with salaries as the main expense, such as:
For an Ontario-based business, the Quick Method calculates HST payments to CRA using a fixed 8.8% rate on total sales and HST, compared to the full 13% HST amount collected from customers.
Let's compare a business using the regular method with one using the Quick Method:
With the Quick Method, a business making $100,000 could save more than $3,000 in taxes. Businesses can still claim input tax credits for capital item purchases, such as equipment and computers.
Not all businesses are eligible. Ineligible businesses include those providing legal, accounting, or consulting services, listed financial institutions, municipalities, public service bodies, public colleges, school authorities, hospital authorities, and charities or non-profit organizations using the Special Quick Method.
Consult a tax professional and review the CRA guidelines here to determine your eligibility and ensure compliance.
Taxes can be complicated, and it's essential to consult with a tax professional before making any key decisions for your business. For more information, refer to the CRA's guide RC4058 – Quick Method of Accounting for GST/HST.
Note: Rates used in this example are specific to service businesses operating in Ontario and purchasing supplies in Ontario. Different payments rates apply depending on the type of business and the province in which it operates and purchases supplies.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without a specific consultation. Lucas CPA Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.