Reverse calculation of Quebec taxes: Intro
If you have a business established in Quebec, you must register for several files on the Revenu Quebec site and pay taxes to operate in full compliance with the laws in force. Among the files to which you must register are the GST and QST files. Note that to calculate these taxes, you have two methods: the normal calculation and the reverse tax calculation. JKB Services, a consulting agency offering accounting services in Montreal , can assist you in this calculation so that you do not make the slightest mistake.
How to calculate the GST and QST
Know that calculate the GST and QST is usually done in two stages. The first step is to calculate the GST at the rate of 5% on the sale price. The QST is subsequently added to the same selling price knowing that it is at the rate of 9.975%.
Also note that the calculation of the GST and the QST can also be done in one step. For this, the rate of 14.975% must be used for the calculation of the two taxes. The amount obtained includes GST and QST for this purpose.
What about the reverse tax calculation?
To be able to do a reverse calculation GST and QST, you have to consider the amount with taxes and split it at the combined rate of 1.14975. The original amount not including the two taxes is then obtained. To obtain the amount of GST, multiply the amount without taxes obtained by 5%. On the other hand, to get the amount of the QST, multiply the amount without taxes by 9.975%.
Note that a margin of error of $ 0.01 is accepted, as rounding of amounts is necessary to facilitate the calculation.
To perform the reverse calculation of taxes, you can use online tools. This option is very interesting as long as you choose the most effective tools.
How to quickly and easily calculate the amounts of GST and QST payable?
This is an accounting method that has proven to be easier to facilitate the calculation of the amounts of GST and QST payable to Revenu Québec. With this method, the Quebec tax calculation only takes a few minutes and the result is indisputable. Note also that there is no need to claim input tax credits (ITC) or input tax refunds (ITRs) for purchases related to commercial activities or for costs of current operations. The reason is that the quick method of accounting takes this into account.
In order to find out the partial amount of GST payable, the total taxable supplies including GST must be multiplied by the applicable rate. The same calculation method should be used to find out the partial amount of the QST to be paid.
You must also calculate the 1% credit on the eligible portion of the taxable supplies and then deduct the partial amounts of taxes. At each reporting period, the amounts calculated must be remitted to Revenu Québec.
The following transactions are not to be considered in the calculation of the total of the supplies:
- Zero-rated supplies;
- Supplies addressed to Indians;
- Sales of real estate and fixed assets.
Note that you can use the quick method of accounting if the QST and GST are included in your selling prices or if you indicate them separately. Keep the documents relating to supplies and purchases made in a safe place.
If you supply in participating provinces, rates may vary depending on the location of your business. They will also be different if you charged HST and GST on your taxable supplies.
For more information on this subject, you can consult the guide entitled "The Quick Method of Accounting for GST / HST. This guide is available from the Canada Revenue Agency website
Know that you don't have to claim RTI or CTI for all of your expenses. These include telephone, rent and even heating costs. On the other hand, you have the right to claim ITRs and ITCs for land and certain goods such as office furniture or even a car. Amounts can be claimed in QST and GST returns.
Other information you should know about the GST and QST
The goods and services tax (GST) and the Quebec sales tax (QST) are mandatory in Quebec for all those who sell or provide goods and services.
To know whether or not to register your business for the GST and QST, you must read the basic rules. These contain all the information directly or indirectly related to the applicable taxes depending on the location chosen for sale or rental. In order to file your GST and QST return, you must follow a number of steps, starting with registering your business for the GST and QST. You must then collect the taxes from your customers. The next step is to calculate the input tax refund credits. All you have to do is file your GST and QST return for all reporting periods.
It should be noted that the terms of application of taxes must be respected regardless of the situation. Those who do not respect them will get penalties, the magnitude of which depends on the severity of the error.
So that you do not make a mistake when calculating the tax or when registering for GST and QST files, JKB Services can assist you in all the steps to follow. Do not hesitate to call on tax services in Montreal from JKB Services if you want to respect a professional approach to the tax declaration.