Calculating your net tax

You need to calculate your business' net tax for each GST/HST reporting period and report this on your GST/HST return. Calculate:

• the GST/HST collected and collectible on your taxable sales or supplies made during the reporting period; and
• the GST/HST paid and payable on your business purchases and expenses for which you can claim an input tax credit (ITCs).

The difference between these two amounts, including any adjustments, is your net tax. It is either your GST/HST remittance or refund.

• If you charged more GST/HST than you paid or owe, send us the difference.
• If you paid or owe more GST/HST than you charged, you can claim a refund of the difference.

For most businesses, this calculation is straightforward.  However, to help reduce paperwork and bookkeeping costs, most small businesses can use the Quick Method of accounting to calculate their GST/HST remittance.

If you do not qualify to use the Quick Method, another way to make the calculations easier is the Simplifed Method of calculating ITCs.

GST/HST charged and not collected
You are liable for the GST/HST you charge on goods or services on the day you receive payment, the date you issue an invoice or the date in an agreement, whichever comes first.

Therefore, if you issue an invoice before you receive the payment, you have to include the GST/HST charged on this invoice in the reporting period that includes the date of the invoice, even if you have not yet received payment of the tax.

Include the GST/HST you charged on both paid and unpaid invoices on your GST/HST return for the reporting period in which you issued the invoices.

GST/HST payable and not paid
When you calculate your ITCs, you can include the GST/HST for purchases and expenses for which you have been invoiced but not yet paid. This means that you can claim an ITC for the GST/HST you owe to your suppliers before you pay the invoice.

Forms and publications

• Quick Method of Accounting for GST/HST booklet (RC4058)
• General Information for GST/HST Registrants guide (RC4022)
• Form GST74, Election and Revocation of an Election to use the Quick Method of Accounting