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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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