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Ontario|Tax LawBusiness Taxes 190 Collecting and remitting GST Collecting and Remitting GST may allow a business to reduce the amount of GST it pays on business expenses. Only businesses which register with Canada Revenue Agency, or which are eligible to register, can collect 7% GST from customers and recover the amount of GST they paid on business expenses.
- Calculating how much GST to remit
There are two main ways of calculating how much GST to remit: the general method and the "Quick Method". The general method requires that you keep track of the GST collected from each business transaction. Then, you add up the GST you paid on allowable business expenses, which in total are called your input tax credits, and subtract that amount from the total GST you collected from customers. The difference is remitted to Canada Revenue Agency. Allowable business expenses which are eligible for input tax credits include merchandise, advertising services, office furniture, equipment, rent, and office supplies. If your business collects less GST than it pays, you can apply to Canada Revenue Agency for a GST rebate.
Most small businesses with annual sales of $200,000 or less can calculate how much GST they owe by the Quick Method. Although the Quick Method may not necessarily save you money, it may simplify your accounting procedures.
- The Quick Method
The Quick Method does not require you to track GST collected on each sale or service performed, and you do not have to claim input tax credits. Instead, you simply pay either 2.5 or 5 percent of your total sales to Canada Revenue Agency. The rate will depend on your annual sales, the type of business, and where your business is located.
The total amount of your annual revenue will determine when you have to report and remit GST. If your revenues are $500,000 or less, you are only required to report annually. If your revenues are between $500,000 and $6,000,000 you are required to report quarterly. And, if your revenues are more than $6,000,000 you are required to report monthly.
For additional information on how to collect and remit GST, you can contact an accountant or call Canada Revenue Agency's Business Inquiries Department listed in the Blue pages of your telephone book.
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