Question
If a business has registered and has annual taxable revenues less than $400000, the Quick Method can be used to calculate ITCs. When using the
If a business has registered and has annual taxable revenues less than $400000, the Quick Method can be used to calculate ITCs. When using the Quick Method in Ontario, the registrant charges customers 13% HST on sales of goods and services. The ITCs for the business are calculated by adding all purchases and expenses including the HST, and then subtracting employees salaries, insurance, and land. The taxable expense amount is then multiplied by 13/113. The result is the amount of ITC.
Courtney operates a souvenir gift shop in Ontario. Her business is registered for the Quick Method of calculating ITCs. Her HST taxable sales were $185 000 for the year. HST-taxable purchases of goods for resale were 47% of sales. In addition, Courtney paid $48 000 in purchases and expenses, which included $42 000 for salaries and insurance.
i Calculate how much HST Courtney remitted to the CRA when using the Quick Method.
ii If she had not chosen to use the Quick Method of calculating ITCs, how much HST would she have to remit?
iii What is the difference in remittances under the two methods?
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