HST or Harmonized Sales Tax is paid on most goods and services in Canada.  In order to remit this amount to the CRA, you must calculate the remittance.  To calculate it, the corporation totals Input Tax Credits (ITCs) on all expenses and subtracts them from the HST collected on sales.  Another option is called the Quick method, which bases the amount on a percentage of sales. 

The quick method affects only how you complete the HST remittance.  The business still charges HST at the same rate, you will still pay HST on expenses, and track HST on all transactions. 

However, when you calculate using the quick method,

•  Start with sales

•  Add HST collected

•  Multiply that number by a percentage based on your business

If you sell goods, like a grocery store, use 4.4%; for services like a fitness instructor, you use 8.8%.  Sales to other provinces will be somewhat different.

•  Subtract $300 of ITC on eligible purchases plus full HST on any capital asset purchases.

This gives you the net HST.

Some of the requirements include that you must be operating the business for at least one year, plus revenues on taxable supplies must be under $400,000 over the previous year.  There are some businesses like accountants, attorneys, actuaries, who are not eligible to use this method.  Plus some non profits are prohibited.  Pretty much everyone else, whether they are or are not incorporated, have the green light to use this calculation method.

Just because you can use it, should you?  If you dread adding all the ITCs, you might want to give it a try.  There are some businesses that will pay significantly less HST using the Quick calculation versus the standard method.  For those who provide services with minimal expense, like that fitness instructor working from home, the quick method is preferred, but if you are renting a storefront, it may not be as good.  Back to someone working from home, using the quick method means you won't be able to deduct rent ITC.

If you file HST annually, you must elect the quick method by the end of the first quarter, March 31, 2021.  You need to complete and remit Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting.  You can find the form on the CRA website and download it.

For many small businesses, the quick method is a reduction in the amount they send to the CRA so there is more usable cash available.  However, if you have a significant number of taxable expenses, the quick method won't gain you any financial advantages, but it can save you time and effort in calculating.

Before making a final decision, check with your accountant.  Especially if he or she is used to dealing with small businesses, you will have access to sound advice and recommendations.  Capex CPA has those experts who are more than willing to discuss your particular circumstances and offer their opinion.

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