Quick Method of Remitting HST

Dear Members,

This is a message for RMTs who have registered with Canada Revenue Agency to use the Quick Method of calculating their quarterly or annual HST remittance.
 
Effective July 1, 2010 the new rate for calculating your HST remittance is 8.2% of total gross revenue earned after July 1, including the 12% HST collected from clients but not including payments made by MSP. You may continue to claim 1% credit on the first $30,000 of gross revenue earned in each calendar year.
 
If you remitted your GST on an annual basis, continue to remit HST on the same basis until CRA advises you otherwise.
 
 
Summary:
 
1.  Calculate 8.2% of total revenue and report this 8.2% on line 103 of your HST return. Total revenue for the purpose of this calculation includes HST collected, does not include payments made by MSP but does include payments made by WorkSafe BC.
 
2.  Calculate 1% of total revenue up to a maximum of $300 and report this on line 107.
 
3.  Subtract line 107 from line 103 and report the result on line 113: this is the amount payable to CRA.
 
4.  GST paid to vendors for capital purchases can also be claimed on line 106 and deducted from the total payable to CRA.
 
Many RMTs and others who sell services (as opposed to goods) have relatively low Input Tax Credits (that is, they pay relatively little HST to vendors and suppliers compared to the HST they collect from their clients). As a result, many RMTs find it advantageous to use the Quick Method: firstly because they no longer need to keep track of all the HST they pay to individual vendors and suppliers (which reduces bookkeeping time) and secondly because many actually send less money to Canada Revenue Agency. That is, they get to keep some of the HST collected from clients.

Using the Quick Method, you calculate one total for your fees and HST combined (but exclude anything paid by MSP). Then you send 8.2% of this total to the Receiver General, less a 1% credit on the first $30,000 in a calendar year.

Example: You earn $1,000 in fees + 12% HST or $120 for a combined total of $1,120. HST payable to the Receiver General would then be 8.2% of $1,120 or $91.84 (less 1% or $11.20 on the first $30,000 = $80.64). So you would have collected $120 in HST but only have to pay either $91.84 or $80.64 to the Receiver General. However, you may no longer deduct the HST you've paid to vendors or suppliers from your payment to the Receiver General (unless it's HST paid on capital assets such as a massage table or a computer).
 
HST collected is reported on line 103 of your HST return and the 1% credit on the first $30,000 is reported on line 107. The amount to be remitted to Canada Revenue Agency is line 103 less line 107.
 
Reference: Canada Revenue Agency RC4058, page 10 www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-10e.pdf
 
Patricia Newton
Accountant
Massage Therapists' Association of BC