Reference no: EM132857870
Question - Regular And Quick Method HST Returns - Kole Ltd. is a retail business situated in Ontario. All of its revenues and expenses are incurred in that province. It has no associated businesses and files its HST return on an annual basis. Its Income Statement for the current year is as follows (all amounts are without the inclusion of applicable HST):
Revenues:
Provision Of Fully Taxable Goods $175,000
Sales Of Exempt Services 50,000 $225,000
Less Expenses:
Cost Of Goods Sold ($ 95,000)
Amortization Expense (15,000)
Salaries And Wages (12,000)
Interest Expense (10,000)
Other Operating Expenses (35,000) (167,000)
Income Before Taxes $58,000
Less: Federal And Provincial Income Taxes (18,000)
Net Income $40,000
Other Information:
1. Inventories of taxable goods decreased by $10,000 during the year.
2. A capital expenditure was made during the year at a HST inclusive cost of $56,500. The expenditure was for equipment that will be used 60 percent for the provision of fully taxable goods. HST was paid on the acquisition of all assets on which amortization is being taken during this period.
3. All of the Other Operating Expenses involved the acquisition of fully taxable supplies and were acquired to assist in the provision of fully taxable supplies.
4. Of the Salaries And Wages, 40 percent were paid to employees involved in providing exempt services.
5. Ontario participates in the HST program. The HST rate in the province is 13 percent.
When the Quick Method is used in the province, the remittance rate is 4.4 percent for a retail business and 8.8 percent for a service provider.
Required -
A. Calculate the net HST payable or refund that Kole Ltd. will remit or receive for the current year using regular HST calculations.
B. Determine if Kole is eligible to use the Quick Method.
C. Assume that Kole is eligible to use the QuickMethod at the 4.4 percent rate. Calculate the net HST payable or refund that Kole Ltd. will remit or receive for the current year using the Quick Method.