Keep more GST Collected

About the Author: Wilson Wong & Associates, are Chartered Accountants in Calgary providing tax and accounting services to small and medium sized businesses and high networth individuals.

Companies typically collect GST on their sales and then pay GST on their purchases. When you go to file your GST return you will offset the amount of GST collected with the GST you've paid to determine the net amount of GST to pay to the CRA for the period. Sometimes it is possible to keep more than what you've paid on GST purchases.

Instead of the traditional GST calculation illustrated above you can apply to change the calculation using what is called the GST Quick Method. Under this method, in lieu of the credits on GST purchases the CRA will use a formula to allow you to keep 1.4% of the 5% you collected. If you're in a service based business you may find that you don't spend a lot on GST purchases and hence the 1.4% keeper is a better deal than the credits on GST purchases.

There's a couple of other small nuances to this formula that sweeten the deal. You may also find it difficult to determine whether Quick Method is a better deal for you at all. My recommendation is to give us a call to help you determine what's your best fit for GST.

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