2 November 2021 External T.I. 2021-0898151E5 - GST/HST Quick Method of Accounting -- summary under Paragraph 12(1)(x)

When qualifying small registrants elect to use the “Quick Method” of accounting for GST/HST obligations, they thereby cease to be entitled to claim ITCs or rebates, but are entitled to remit only specified percentages, rather than all, of the GST/HST collectible by them. CRA confirmed that the resulting “net gain experienced by them” (i.e., the percentage amounts they are permitted to keep rather than remit) constitute government assistance pursuant to s. 12(1)(x) and are thus included in their income (assuming no s. 12(2.2), 13(7.1) or 53(2)(k) election). However, since no ITCs (which result in income inclusions under s. 248(16)) can be claimed by them, the GST/HST payable on their deductible expenses is included in the amount of those expenses for income computation purposes.