Quick Method Of GST/HST Tax Rules - Can this Minimize Your Taxes?

Quick Method Of GST/HST Tax Rules - Can this Minimize Your Taxes? Image

 

If you have annual worldwide taxable supplies of $400,000 or less, including the GST/HST and zero-rated supplies, then you can file an election to use the QUICK METHOD for GST/HST (provided you are not under the “exception” category: e.g., legal, financial, tax and accounting businesses).

You must still invoice the 5% GST or your provincial HST rate (Ontario would be 13%). You do not need to track your GST/HST input tax credits (ITCs) for most purchases/expenses because you remit based on a set remittance tax rate. You only track ITCs paid on capital asset purchases.  The remittance rate varies depending if you are a business that provides services OR a business that purchases goods for resale.

In Ontario, the remittance rate for a service business is 8.8% of total sales (that includes HST).  There is also a 1% credit that can be claimed on the total sales.  The maximum credit that can be claimed in a fiscal year is $300 (or 1% on first $30,000 of sales).  You can also claim ITCs that you paid on purchase of business capital assets such as real estate, office furniture, office equipment, computers, software, vehicles, leasehold improvements, etc.

 

The above information is of a general nature only and should not be relied upon for specific situations.  Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below to set up a consultation.

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