GST/HST streamlined accounting thresholds

To simplify compliance, certain small businesses can elect to use the Quick Method of accounting to determine the amount of GST/HST to remit. Under this method, GST/ HST-included sales are multiplied by a specified remittance rate to determine the amount of tax that needs to be remitted to the CRA. Certain small service business can elect to use the Quick Method if annual tax-included sales (including those of associates) do not exceed $400,000. Input tax credits are not claimed by a person using the Quick Method, except for the GST/HST paid on capital purchases.

Many small businesses can also elect to use the Streamlined Input Tax Credit Method, which provides a simplified process for determining ITCs. This method can be used by a business with annual taxable sales (including the sales of associates) not exceeding $1,000,000 and annual taxable purchases (excluding zero-rated purchases) not exceeding $4,000,000. Under this method, businesses can calculate their ITCs based on a portion of their eligible total tax-included business purchases. The tax factor used to calculate ITC entitlement is based on the tax rate applicable to the purchases. For instance, where all purchases were subject to only the 5% GST, the business would multiply the total of its tax-included business purchases by a tax factor of “5/105.”

An election must be filed to use the Quick Method; however, an election does not have to be filed to use the Streamlined Input Tax Credit Method.