GST/HST Quick Method is a simplified accounting method for small businesses that makes it easier to calculate and remit GST/HST. If your business is eligible, you can use this method to save time and reduce administrative costs. In this blog post, we’ll discuss everything you need to know about the GST/HST Quick Method.

What is the GST/HST Quick Method?

The GST/HST Quick Method is an accounting method available to businesses with annual sales under $400,000. It simplifies the way you calculate the amount of GST/HST you owe to the Canada Revenue Agency (CRA). Instead of calculating the actual GST/HST you’ve collected and paid, you apply a percentage to your gross revenue. This percentage varies depending on your business type and location.

How does the GST/HST Quick Method work?

Under the Quick Method, you only need to remit a percentage of the GST/HST you’ve collected from your customers. The percentage you use is based on the province or territory where your business is located and the type of business you have. The CRA provides a list of the rates for each province and territory.

To use the Quick Method, you’ll need to determine your eligible revenue for the period. Eligible revenue is your total revenue minus GST/HST, provincial sales tax, and other taxes you’ve collected. You’ll then multiply your eligible revenue by the applicable Quick Method rate. This will give you the total amount of GST/HST you owe for the period.

The Quick Method also allows you to claim input tax credits (ITCs) on certain expenses. However, the ITCs you can claim are limited, and you can’t claim the full amount of GST/HST paid on your expenses.

Who is eligible for the GST/HST Quick Method?

To be eligible for the Quick Method, your business must meet the following criteria:

  • Your annual sales are $400,000 or less (including GST/HST)
  • You aren’t a listed financial institution
  • You don’t sell or lease taxable real property

If your business meets these criteria, you can apply to use the Quick Method. However, some businesses are not eligible for the Quick Method, such as taxi and limousine operators, and non-residents who provide taxable supplies in Canada.

What are the benefits of using the GST/HST Quick Method?

Using the Quick Method can provide several benefits for small businesses, including:

  • Reduced administrative burden: The Quick Method simplifies the calculation of GST/HST, reducing the amount of paperwork and time required to complete your returns.
  • Lower tax liability: The Quick Method can result in a lower tax liability than the regular method, particularly for businesses with low input tax credits.
  • Improved cash flow: The Quick Method allows you to remit a lower amount of GST/HST, which can help improve your cash flow.

In conclusion, the GST/HST Quick Method is a simplified accounting method available to small businesses that can help reduce administrative costs, save time, and improve cash flow. If your business meets the eligibility criteria, it’s worth considering the Quick Method as an alternative to the regular method. However, it’s important to understand the limitations and benefits of the Quick Method before making a decision.