As contractors, your services are predominately driven by labor. Unlike a manufacturer or a product reseller, material purchases are not as significant as your labor costs.
Do you qualify:
If you’re a contractor with a business generating less than $400,000 (including GST/HST) a year, you’re likely eligible to file your GST/HST and QST (for Quebec contractors) using a Quick Method.
The government offers the Quick Method for small businesses to save time with their GST/HST and QST remittances.
Eligible contractors are can save up to thousands of dollars a year using the Quick Method in comparison to the regular GST/HST and QST method.
How it works:
John Smith Contracting Co is based in and offers its services in Ontario. The annual sales are $300,000 ($339,000 with 13% HST), with annual non-capital purchases subject to HST of $50,000 (i.e.: materials, etc.).
Under the Regular Method:
HST Collected on Sales: 13% x $300,000 = 39,000
HST Paid on Purchases: 13% x $50,000 = 6,500
Net Balance Owed to Government: $32,500
Under the Quick Method:
Annual Sales Including HST: 8.8% x $339,000 = 29,832
Rebate on Annual Sales of $30,000 or less including HST: -1% x $30,000 = (300)
Net Balance Owed to Government: $29,532
Estimated Savings from Quick Method: $2,968
You can access all the details on the Quick Method for GST/HST filings on the CRA website and QST Filings on the Revenu Quebec website.
We encourage you to contact your accountant to see if the Quick Method is suitable for your organization.
Should you have any additional questions, GC Reno is here to help! Send us an email and we will be more than happy to assist.