Canada Revenue Agency
www.cra.gc.ca
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Calculating your net tax for charities
If you are registered for GST/HST, you have to file a GST/HST return. On your return, you calculate your net GST/HST remittance or refund. This calculation takes into account your:
- net tax (usually the GST/HST collected or collectible, less input tax credits (ITCs)); and
- instalments, rebates and other credits, and debits.
Charities use a different method than other registrants to calculate net tax. When you use this calculation method, you remit 60% of the GST/HST you collect and claim ITCs only on certain items. In addition, you can claim the public service bodies' rebate for the GST/HST paid or payable on your eligible purchases and expenses and for which you cannot claim ITCs, whether the GST/HST relates to your taxable or exempt activities. For detailed information on completing your return, see Determining your net tax as a charity in Guide RC4082, GST/HST Information for Charities.
Your charity, as a whole, can elect not to use the net tax calculation method for charities if it makes supplies outside Canada or zero-rated supplies in the ordinary course of its business, or if 90% or more of its supplies are taxable. To make this election, complete Form GST488, Election or Revocation of an Election Not To Use the Net Tax Calculation for Charities, and send it to us. You can then calculate the charity's net tax using the general rules. In addition, your charity may be eligible to use the simplified method to calculate ITCs.
Note
With one exception, charities can no longer use the Special Quick Method of Accounting for Public Service Bodies to calculate their net tax. Only designated charities may still be eligible to use the Special Quick Method of Accounting for public service bodies. A designated charity is one that provides employment-related assistance to individuals with disabilities, supplies the services of these individuals to clients, and has applied to the Director, Public Service Bodies and Governments Division, Excise and GST/HST Rulings Directorate, 14th Floor, Tower A, Place de Ville, Ottawa K1A 0L5 to make the charity's supplies of these services taxable. These charities are not eligible to use the net tax calculation method for charities.
