October 30th, 2023
Organization presentation and challenges
Several years ago, a municipality decided to use the special quick method of accounting for public service bodies (hereinafter, “the quick method”). This choice allows us to remit only a portion of the tax collected to the minister. However, as a general rule, a public service body (hereinafter “PSB”) that has chosen the quick method cannot claim an input tax refund (hereinafter “ITR”) for expenses incurred in the course of its commercial activities, with a few exceptions.
Following an increase in the municipality’s fee-based activities over the years, Consultaxe was commissioned to determine whether it remained more advantageous for the municipality to use the quick method.
Our involvement
We analyzed the GST & QST returns for the last fiscal year to determine whether choosing the quick method was still advantageous, particularly given the high level of commercial activity in the municipality. Based on our estimates, and considering the level of commercial activity at the sports centre and other activity sites, we determined that, for the last year, using the regular method would have generated additional QST savings of over $40,000 compared with the quick method. To establish this amount, we calculated the total amount of QST rebates and ITRs that the municipality could claim on the acquisition of certain capital expenditures under the quick method over the past year, and then deducted from this amount the estimated ITRs to be claimed on expenditures related to the sports centre and other commercial activities.
Result
The municipality arranged to stop using the quick method as quickly as possible, so as to start benefiting from these substantial and recurring future savings.