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calculation of GST and QST
The Goods and Services Tax (GST) and the Quebec Sales Tax (QST) are federal and provincial government taxes added to the amount of a sale of taxable goods or services.
Self-employed individuals and businesses registered for GST and QST must file a return for both provincial and federal taxes.
Once registered, you must learn how to calculate GST and QST, so you will know what exact amount needs to be collected.
Depending on the frequency chosen at the time of registration, these returns must be provided to the government on a monthly, quarterly, or annual basis, even if there is no balance to pay or refund to receive. It is an obligation!
At EB Conseil Fiscal Inc., GST and QST calculations are offered as accounting services. Our accounting firm can also assist you in filing your tax returns.
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Which Methods Should You Use to Calculate GST/QST?
the classic method and the quick method.
Quick Method
The Quick Method is more beneficial to small businesses. To use the Quick Method in Quebec, your total annual taxable sales (for four consecutive quarters) cannot exceed $418,952, including QST.
The Quick Method is calculated as follows: you charge GST and QST to your customers. However, you do not have to claim input tax credits (ITCs) or input tax refunds (ITRs) for your current operating expenses and purchases related to your commercial activities.
To calculate your GST remittance, simply multiply your total taxable sales (including GST) in Canada by the applicable rate (either 1.8% or 3.6%, depending on your situation). For the partial amount of QST to be remitted, multiply your total taxable sales (including QST) in Quebec by the applicable rate (either 3.4% or 6.6%, depending on your situation).
If your tax situation allows, you can also calculate the 1% credit on the eligible portion of your taxable supplies and deduct it from the partial tax remittance.
To summarize, you charge 14.975% tax to your customers on your services or products, and you pay the government between 4.2% and 10.2%. This means that you make between 5% and 10% on what you charge your customers. However, you cannot recover taxes on your purchases.
Classic Method
The classic method is more advantageous when you have significant business expenses. With this method, you can recover some of the GST and QST paid on goods and services by claiming ITCs and ITRs. Input tax credits (ITCs) and input tax refunds (ITRs) can be claimed for your business inputs, such as office furniture purchases, work tools, or promotional items.
To be eligible for ITCs and ITRs, you calculate the GST and QST collected from your customers as well as the taxes charged that are due, i.e., those that have not been paid during the reporting period. You must also account for the GST and QST that you paid.
Once you have both amounts, you calculate the difference between the two. If the difference is negative, you are entitled to a refund, while if it is positive, it is the net tax payable to the government.
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Calculate Your QST and GST Sales Tax with EB Conseil Fiscal Inc.
At EB Conseil Fiscal Inc. we can advise you on the most advantageous calculation method for your business activities. Through our GST-QST service, we will guide you through the complete management of your taxes, from calculation to declaration. Let our team guide you through the entire process and avoid being caught off guard.
Would you like to learn more about our services or get personalized advice? Contact us for more information!