Completing your company’s GST claim can be a hassle! You have to track the GST you’ve been charged and the GST you’ve paid and back up these claims with invoices and receipts. If you miss any input tax credits, you pay too much. Luckily, the GST quick method can save business owners both tax and time. You can use the quick method if taxable sales for your business do not exceed $400,000 for the fiscal year. Instead of claiming the GST paid on purchases as an input tax credit, you need only remit a portion of the tax you collect to the Canada Revenue Agency (CRA).
The GST Quick Method:
- Is a simplified accounting option (eliminates the need to record and report the actual GST paid or payable on most purchases)
- Reduces paperwork
- Simplifies calculations
- Requires submission of 2.6% of the first $30,000 of gross revenue and 3.6% of the gross revenue after that
- Can save you $1,000 or more each year
- Allows you to claim ITCs on purchases of real property, capital property (computers, equipment, vehicles), eligible capital property, and improvements to those properties
You can use the GST quick method if:
- You’ve been in business continuously throughout the 365-day period ending immediately before your current reporting period
- You’re a new registrant and you expect your taxable supplies to be $400,000 or less in your first full year of business
- You didn’t revoke an election of the quick method or the simplified method for claiming ITCs during that 365-day period
- You’re not a person listed under Exceptions
- Your revenues are not more than $400,000 for either the period consisting of the first four consecutive fiscal quarters out of your last five fiscal quarters or the period consisting of the last four fiscal quarters out of your last five fiscal quarters.
Who can use the GST quick method?
Most goods and service-based small businesses are eligible to use the quick method.
- IT consultants
- delivery services
- dry cleaners
- auto repair shops
- quick-service food outlets
- house-cleaning services
- painting contractors
- taxi drivers
Who is ineligible for the GST quick method?
- accountants or bookkeepers
- financial consultants
- listed financial institutions
- lawyers (or law offices)
- notaries public
- listed financial institutions
- audit services
- tax return preparers or tax consultants
- municipalities, or local authorities designated as municipalities
- public colleges, school authorities, or universities, established and operated not for profit
- hospital authorities
- charities and non-profit organizations with at least 40% government funding in the year
How do you elect to use the quick method?
You can elect to use the quick method by using online services:
- My Business Account, if you are a business owner
- Represent a Client, if you are an authorized representative or employee
- You can also elect to use the quick method by completing Form GST74
Do you find calculating GST difficult and time-consuming? The GST Quick Method is faster and easier to use than the general procedure and, in most cases, saves you money. Check out your company’s eligibility for the Quick Method. Save time, money and hassle! Sign up for the GST Quick Method today.
Need help calculating your GST? Wondering if you qualify for the GST Quick Method? Contact Cook and Company Chartered Professional Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company uses their experience and expertise to help you. Contact us for a complimentary consultation.