Calculating your net tax

If you are a charity, see Calculating your net tax for charities. If you are a public service body, see Calculating your net tax for public service bodies.

You have to calculate your net tax for each GST/HST reporting period and report this on your GST/HST return. To do so, calculate:

• the GST/HST charged on your taxable supplies made during the reporting period; and
• the GST/HST paid and payable on your business purchases and expenses for which you can claim input tax credit (ITC).

The difference between these two amounts, including any adjustments, is called your net tax. It is either your GST/HST remittance or your GST/HST refund. If you charged more GST/HST than the amount paid or payable, send us the difference. If your GST/HST paid or payable is more 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 Simplified Method to claim input tax credits (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 or the day the payment is due, whichever is earlier. We usually consider payment to be due on the date you issue an invoice or the date specified in an agreement, whichever comes first. 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 collected the tax. Include the GST/HST you charged for both paid and unpaid invoices on line 103 of your GST/HST return (or include it in your calculation for line 105 if you are filing electronically) for the reporting period in which you issued the invoices.

GST/HST not charged

If you are required to charge the GST/HST but did not charge it, you are still liable for the tax. You have to include the GST/HST that you should have charged in the reporting period during which you should have collected the tax.

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 get a credit for the GST/HST you owe to your suppliers before you pay the invoice.

Forms and publications

• Guide RC4022, General Information for GST/HST Registrants
• Booklet RC4058, Quick Method of Accounting for GST/HST
• Form GST74, Election and Revocation of an Election to use the Quick Method of Accounting
• GST/HST Info Sheet GI-017, GST/HST Rate Reduction - Streamlined Methods of Accounting for Small Businesses
• GST/HST Info Sheet GI-041, The 2008 GST/HST Rate Reduction and Streamlined Methods of Accounting for Small Businesses