There was some discussion on a PWAC writers’ forum about how to use the Quick Method to calculate how much HST to remit to the government. I asked tax consultant, and former PWAC member, Sunny Widerman for her take on using the Quick Method to remit your HST payment. Thought I’d post her reply here as well. – Paul
Note: All figures are for Ontario. Figures may change for your province.
When you use the Quick method to remit your HST payment, the HST you collect becomes part of your income. What you remit is a percentage of that income.
So while you collect HST on top of your fee at 13%, you remit 8.8% of the total collected, including HST.
Take this example: If your fee was $1,000, you’d bill the client $1,130. When it came time to remit, you’d remit 8.8% of $1,130.
You do pay an increased amount if you collect more than $30,000 in fees, but it’s not an increased rate. What happens is that after you calculate the HST to remit using the outline I’ve given here, you calculate 1% of your freelance income or $300, whichever is less, and you get that back. Essentially it’s a rebate that runs out once you cross that $30,000 threshold.
Personal Tax Advisors
Learn more and sign up for free tax tips