- FP-2074-V – Election or Revocation of Election Respecting the Quick Method of Accounting
General Information
Definitions
Business engaged in the resale of goods
A business that is registered for the GST/HST or QST and that acquires tangible personal property (corporeal movable property under the QST system), other than basic groceries or property on which the business did not have to pay tax, for the purpose of reselling it. The cost of the property must represent at least 40% of the total annual taxable supplies made in Canada (for GST/HST purposes) or in Québec (for QST purposes), excluding supplies of financial services and sales of real property (immovable property under the QST system), capital assets, eligible capital property and goodwill.
Business engaged in the provision of services
A business that is a GST/HST or QST registrant and that does not qualify as being engaged in the resale of goods.Permanent establishment
For a given person, a permanent establishment is either
- a fixed place of business where a particular person makes supplies, including a place of management, a branch office, an office and a factory, as well as a workshop, a mine, an oil or gas well, timberland, a quarry, or any other place where natural resources are extracted; or
- a fixed place of business where another person (other than a broker, a general commission agent or independent agent acting in the ordinary course of a business) that is acting in Canada for GST/HST purposes or in Québec for QST purposes on behalf of the particular person and through which the particular person makes supplies in the ordinary activities of a business.
Participating province
A province that has signed an agreement respecting the HST. A list of the participating provinces is available on Revenu Québec's website at www.revenuquebec.ca. Québec is not a participating province.Non-participating province
A province, a territory or any other space in Canada that is outside the participating provinces. Québec is a non-participating province.Total annual supplies
Under the GST/HST system, for a business to use the Quick Method of Accounting for a reporting period, the total worldwide taxable supplies (including zero-rated supplies) of the business and of its associates for any four consecutive quarters in the five most recent quarters must not exceed $400,000 (GST/HST and zero-rated supplies included) for any reporting period beginning after December 31, 2012. Do not take into account exempt supplies, supplies of financial services or sales of real property (called immovable property under the QST system), capital assets, eligible capital property and goodwill.Under the QST system, the limit on total annual supplies, including the QST only and zero-rated supplies, is $418,952 if the election is made for a reporting period beginning after December 31, 2012.
Application
A business can begin using the Quick Method of Accounting on the effective date of the election indicated on this form. The effective date must be the first day of a GST/HST and QST reporting period. When using the Quick Method of Accounting, the business must collect GST/HST and QST in the usual way, but the GST/HST and QST amounts remitted to Revenu Québec must be calculated using the Quick Method of Accounting rate that applies to the business.If a business elects to use the Quick Method of Accounting, that method must be used for at least one year. The election applies to all branches and divisions of the business (even if they file separate returns). The election remains in effect for as long as the business meets the eligibility requirements or until the election is revoked.
The business must inform Revenu Québec if it ceases to be eligible to use the Quick Method of Accounting.
Filing deadline
A business with a monthly or quarterly reporting period must file this form no later than the filing deadline for the reporting period during which it began using the Quick Method of Accounting.A business with an annual reporting period must file this form no later than the first day of the second quarter of the fiscal period for the election to be effective for that period.
The GST/HST and QST reporting periods must be the same.
Remittance rates
Under the GST/HST system, there are several different remittance rates for the Quick Method of Accounting. A business may have to use more than one rate if it makes taxable supplies in both participating and non-participating provinces. In addition, businesses that make taxable supplies in participating provinces may have to apply different rates to their supplies, depending on location and on whether they must collect GST or HST. For a complete list of remittance rates, see the Canada Revenue Agency website at www.cra-arc.gc.ca.The special 90% rules (for the GST/HST only)
The special 90% rules enable a business to use a single remittance rate. If 90% or more of the businesss taxable supplies during a particular reporting period are made through a permanent establishment located in a non-participating province, the business can treat all of the supplies for that reporting period as having been made in that non-participating province. Similarly, if 90% or more of the businesss taxable supplies are made through a permanent establishment located in a participating province, the business can treat all of its taxable supplies as having been made in that participating province.Remittance rates for a non-participating province since January 1, 2012
The table below shows the remittance rates for a business with a permanent establishment in Québec (which is a non-participating province) that makes taxable supplies in Québec or in another non-participating province. The QST remittance rates apply to supplies made in Québec.
| Rate | ||
| Type of business | GST | QST |
|
Business engaged in the resale of goods in a non-par- ticipating province |
1.8% | 3.4% |
|
Business engaged in the provision of services in a non- ticipating province |
3.6% | 6.6% |
Special rate reduction
Under the GST/HST system, a business can apply a rate reduction of 1% for each fiscal year to the first $30,000 (GST/HST included) of its taxable supplies, provided the election to use the Quick Method of Accounting was in effect at the beginning of the fiscal year in question or on the date on which the GST/HST registration came into effect. The 1% rate reduction applies under the QST system, on the same conditions, to the first $31,421 of taxable supplies (QST included) for a reporting period beginning after December 2012.If a business files monthly or quarterly returns, the 1% rate reduction applies to the first reporting period and subsequent reporting periods in the fiscal year, until the fiscal year ends or until the amount of supplies made reaches $30,000 (GST/HST included) or $31,421 (QST included). If a business files annual returns, the 1% reduction applies to the first $30,000 (GST/HST included) or the first $31,421 (QST included) of taxable supplies made during the fiscal year.
If the amount of supplies in any fiscal year is less than $30,000 (GST/HST included) or $31,421 (QST included), the unused portion of the rate reduction cannot be carried forward.
To claim the 1% rate reduction for a reporting period, enter the amount claimed on line 107 of the GST/HST return and on line 207 of the QST return.
Special cases
Use of the Quick Method of Accounting for certain sales and purchases
Even if a business uses the Quick Method of Accounting, it must nonetheless collect and remit GST/HST and QST, calculated at the rates in effect, on sales of real property (immovable property under the QST system), capital assets and eligible capital property. Also, the taxes to be remitted on deemed supplies must be calculated according to sections 172 and 173 of the federal Excise Tax Act and sections 285 to 293 of the Act respecting the Québec sales tax (including sections concerning taxes on certain taxable benefits).Input tax credits (ITCs) and input tax refunds (ITRs) can be claimed, in accordance with the usual rules, with respect to purchases of real property, capital assets and eligible capital property.
Taxes collected but not remitted
The Quick Method of Accounting remittance rates are less than the applicable rates of GST/HST and QST the business charges its clients. Note that, while a business cannot claim ITCs and ITRs respecting most of its current expenses using the Quick Method of Accounting, the portion of tax the business keeps represents the approximate amount of ITCs and ITRs it could have claimed. In addition, note that where GST/HST and QST are collected and a portion is not remitted owing to the use of the Quick Method of Accounting, the unremitted portion must be taken into account in calculating the businesss income for the purposes of both the Québec Taxation Act and the federal Income Tax Act.Revocation of the election to use the Quick Method of Accounting
The revocation of the election to use the Quick Method of Accounting will take effect on the first day of the reporting period, provided at least one year has passed since the election took effect. Where a business seeks to revoke such an election, it must do so no later than the deadline for filing its return for the last reporting period during which the election was still in effect. Once the election has been revoked, the business must wait at least one year before it can once again elect to use the Quick Method of Accounting.Sending the form
Send this duly completed form to Revenu Québec at one of the following addresses:- 3800, rue de Marly
Québec (Québec) G1X 4A5
- C.P. 3000, succursale Place-Desjardins
Montréal (Québec) H5B 1A4
You can also consult Revenu Québecs website at www.revenuquebec.ca or call our client services at 418 659-4692 (Québec) or 514 873-4692 (Montréal), or, toll-free, at 1 800 567-4692 (other regions).