Quick Method of Accounting GST/HST- FREE TUTORIAL

The quick method of accounting was introduced by the Canada Revenue Agency in 2013 and provides a cost-effective and easy solution for Small to Medium enterprises for GST/HST purposes. The quick method was designed to save small and medium business owners in Canada and provide small and medium business owners a fast and cost-effective solution to deal with your taxes.

The quick method was initially adopted in 2013 by the Canada Revenue Agency.

The quick method of accounting

The quick method is another accounting option available to help small businesses calculate their net tax for GST/HST purposes. This method reduces paperwork and makes it easier to calculate GST/HST remittances and file GST/HST returns because it eliminates the need to report the actual GST/HST paid or payable on most purchases.

When you use the quick method, you still charge the GST at the rate of 5% or the HST at the applicable rate on your taxable supplies of property and services. For the list of applicable GST/HST rates go to GST/HST calculator (and rates). However, to calculate the amount of GST/HST to remit, multiply the revenue from your supplies (including the GST/HST) for the reporting period by the quick method remittance rate, or rates, that apply to your situation.

The remittance rates of the quick method are less than the applicable rates of GST/HST that you charge. This means that you remit only a part of the tax that you collect, or that is collectible. Since you cannot claim ITCs on most of your purchases when you use this method, the part of the tax that you keep accounts for the approximate value of the ITCs you would otherwise have claimed. For more information, see What are your quick method remittance rates?

Note

Whether the quick method will be more beneficial for you to use than the regular method depends on your specific situation.

Who can make this election?

You can use the quick method if you meet all of the following conditions:

• You have been in business continuously throughout the 365-day period ending immediately before your current reporting period (if you are a new registrant, see New registrants).
• You did not revoke an election of the quick method or the simplified method for claiming ITCs during that 365-day period.
• You are not a business type listed under Exceptions below.
• Your revenues (including the GST/HST) from annual worldwide taxable supplies, (including zero-rated supplies) and those of your associates, 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. When you calculate your annual worldwide taxable supplies, exclude revenues from supplies of financial services and sales of real property, capital assets, goodwill from the sale of a business, and, before January 1, 2017, eligible capital property.