Simplified method to claim input tax credits

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Simplified method to claim input tax credits

Video series: GST/HST Information for a New Small Business

Segment 9: Calculating net tax using the Quick Method and using the Simplified Method to calculate ITCs


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The simplified method for claiming input tax credits (ITCs) is an alternative way for eligible registrants to calculate their ITCs.

When you use the simplified method, you do not have to show the GST/HST separately in your records. Instead, total the amount of your taxable purchases for which you can claim an ITC. You still have to keep the usual documents to support your ITC claims in case we ask to see them.

You can use the simplified method if your annual worldwide revenues from taxable goods and services (including those of your associates) are 1 million dollars or less in your last fiscal year.

Note

If you are a charity, you can use the Simplified method for claiming ITCs once you have elected not to use the net calculation for charities. For more information, see Can you choose not to use the net tax calculation method assigned to charities?.

Your total taxable supplies (including those of your associates) for all preceding fiscal quarters of the current fiscal year must also be 1 million dollars or less. These limits do not include goodwill, zero-rated financial services, or sales of capital real property.

Also, you must have 4 million dollars or less in taxable purchases made in Canada in your last fiscal year to qualify to use this method. The 4 million dollars purchase limit does not include zero rated purchases, but it does include purchases imported into Canada or brought into a participating province.

If you are a public service body, you must be able to reasonably expect that your taxable purchases in the current fiscal year will not be more than 4 million dollars.

Specific information only for listed financial institutions

Listed financial institutions cannot use the simplified method to calculate ITCs.End of specific information

If you qualify, you can start using the simplified method at the beginning of a reporting period. You do not have to file any forms to use it. Once you decide to use this method, you have to use it for at least one year if you continue to qualify.

For more information and instructions on how to use this method, see How the simplified method works.

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Date modified:
2015-03-03