Quick Method of HST/GST calculation


Once you or your business registered for HST/GST you have to calculate it and file online to avoid additional penalties and interest. It is not a very simple process but there is an easier way of doing it. It is called the Quick Method. CRA has extensively explains on how to do it in the Guide RC4058 Quick Method of Accounting for GST/HST​or RC4247 for Public Services Bodies (not covered in our below discussion)

Let us cover the main aspects:
– the quick method is another accounting option available to help small businesses calculate their net tax for GST/HST purposes.
– your annual worldwide taxable sales must not be more then $400,000 (for reporting periods beginning in 2013).
– when you use the quick method, you still charge the GST at the rate of 5{644c188ec34b4ee0b5792790f5cd1bfc790305ed25555d8a150887a5eb309bab} or the HST at the applicable rate (see the chart GST/HST Rates) on your taxable supplies of goods and services.
However, to calculate the amount of GST/HST to remit, you multiply the amount of your GST/HST included supplies for the reporting period by the quick method remittance rate, or rates, that apply in your situation.
– the remittance rates of the quick method are less than the applicable rates of GST/HST that you charge (see the chart ​ in the guide for ​
GST/HST Rates).

This means that you remit only a part of the tax that you collect, or that is collectible.
​You have to make and file an election with CRA(form GST70)​ for this method of calculation to apply to your business.

Here is a list of the persons who CANNOT use the quick method:
– persons that provide legal, accounting or actuarial services in the course of the person’s professional practice;
– persons that provide bookkeeping, financial consulting, tax consulting or tax return preparation services in the course of the person’s commercial activity;
– listed financial institutions;
– municipalities or local authorities designated as a municipality;
– public colleges, school authorities, or universities;
– hospital authorities;
– charities; or
non-profit organizations with at least 40{644c188ec34b4ee0b5792790f5cd1bfc790305ed25555d8a150887a5eb309bab} government funding in the year (qualifying non–profit organizations)

And a good thing is if you ever become ineligible for this form of HST/GST calculation or decided that regular method is more beneficial for you you can always revoke the election by filing the same form GST70.

We often recommend this form of HST/GST calculation for those who are in computer consulting industry.

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