Sundry Income Secret for Independent Contractors to File HST

 If a start-up or a corporation registers its business with the CRA (Canada Revenue Agency), it has to file HST. Start-ups or corporations need to file it using the regular method, that is, simple. By doing it, they can claim for their ITCs (Input Tax Credits) against collected HST. Another method to file Harmonized Sales Tax (HST) is a Quick Method that has some restrictions. For example, accountants cannot use this way to calculate HST if the sales are over $ 400,000.


Who Can Use Quick Method of Accounting in Canada to Calculate HST?

 

Usually, independent contractors are eligible to use the Quick Method to add more income to their business. The reason is that they remit 88% of the HST they collect and cannot claim HST they pay on purchases except capital assets. 12% is, in fact, the ‘Sundry Income.’ It creates a win-win situation for independent contractors. Consequently, the Quick Method is a source of income for businesses incurring a small amount of taxable expenses owing to few ITCs. Furthermore, small businesses with taxable sales of $400,000 or less can only use this method to calculate HST.

 

An Assumption to Understand How HST Is Calculated:-

 

Bob is an independent contractor who chooses the Quick Method to calculate HST for his 2018 calendar year. Here is what he assumes with his calculations: GST/HST registrants with the Quick Method are eligible for a 1% bonus reduction at a remittance rate applicable to the first $30,000 tax included GST/HST collected minus GST/HST paid. As a result, Peter saved $5,162 in HST, becoming his Sundry Income.

 

Changing The Filing Method for HST:-

 

You can change your HST filing method at the end of the filing period. For example, if your filing date is December 31st, you cannot change the period for the year that passed by. However, you can make a change from January 1st to the end of February. It is fair, according to the CRA. CRA wants businesses to know how much HST they have collected and paid using the right method. Plus, business owners need to make a choice and stick to it for a year. Hence, you should know the best method to calculate HST as per your convenience and benefit from it.

 

How Can a CPA Firm Help You with HST Filing?

 

A CPA (Chartered Professional Accountant) firm exists to serve HST registrants and help them file their HSTs the right way. Moreover, a reputable accounting firm’s CPA, cannot only assist you with filing HST, but more. Hence, it would help if you did not overlook hiring a CPA to get the right advice concerning tax filing plus saving your money.

 

Conclusion:-

 

Every HST registrant has to file HST. Filing the Harmonized Sales Tax helps HST registrants claim their ITCs. Two methods to file it include a regular method and the Quick Method. However, accountants cannot use the latter method. Quick Method is for small business owners with taxable sales of $400,000 or less. Independent contractors increase their business income using the Quick Method to calculate HST. If you also want to benefit from filing your HST the right way, considering hiring a CPA having tax expertise.


.Author Bio:-

Sohail Afzal is a CMA (Certified Management Accountant) and the Founding Partner of a professional accounting firm, GTA Accounting. He understands the needs of small-scale businesses & corporations and offers them tax advice to overcome their tax burdens. He is a professional author who often writes articles related to accounting.

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