Calculation Method for Charities

If you are a GST and QST registrant, as a rule, you must use the net tax calculation method for charities when you complete GST and QST returns. You cannot use the Special Quick Method of Accounting reserved for public service bodies.

You may, however, elect not to use the net tax calculation method for charities if you are in one of the following situations:

  • You make sales of property and services outside Canada (or outside Québec, for QST purposes) in the ordinary course of a business.
  • You make zero-rated sales of property and services in the ordinary course of a business.
  • Substantially all (90% or more) of your supplies are taxable.

To make the election, complete and return form FP-2488-V, Election or Revocation of an Election Not to Use the Net Tax Calculation for Charities. You then calculate your net tax according to the general rules.

Designated charities cannot use the net tax calculation method for charities.

Details on the net tax calculation method

Under the net tax calculation method for charities, you must remit 60% of the taxes charged (collected and collectible).

In the case of capital property or immovables, you must remit all of the taxes collected or collectible. If you use this method, you can claim input tax credits (ITCs) and input tax refunds (ITRs) only with respect to taxes paid to purchase or make improvements to capital property or immovables. For more information, click Capital Property.

If you use the net tax calculation method for charities, you may claim a rebate of 50% of the GST and QST paid for which you cannot claim ITCs or ITRs, even if the supplies of property or services are taxable.

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