Net GST calculation method for charities. (Voluntary Sector).

OTTAWA -- To calculate their net GST/HST remittance or refund, charities that are GST/HST registrants are required to use a simplified net tax calculation when completing their GST/HST returns, according to a Canada Customs and Revenue Agency bulletin.

Using this method, charities remit only 60% of the GST/HST they collect or that was collectible on most of their taxable supplies, and 100% of the GST/HST collected or that was collectible on taxable sales of real and capital property. Charities are able to claim input tax credits for GST/HST payable only on purchases of and Improvements made to real or capital property, subject to the normal eligibility rules. Charities are still entitled to claim rebates in respect of their non-creditable tax charged. A charity may elect not to use this special net tax calculation method if it makes supplies outside Canada, or zero-rated supplies in the ordinary course of its business, or if 90% or more of the supplies are taxable. Once the election is made, the charity will calculate its net tax remittance or refund using the general rules and must apportion its purchases between its taxable and exempt activities when calculating its entitlement to input tax credits and rebates.