What is the quick method for GST/HST and who should use it?

What the quick method actually changes on your return

Under the regular method, you charge GST/HST on your sales, then subtract the GST/HST you paid on your business purchases, your input tax credits, to arrive at what you owe the CRA. The quick method skips that subtraction for most purchases. Instead, you multiply your total sales, including the tax you collected, by a set remittance rate and send that amount to the CRA, keeping the rest.

One exception survives the switch: input tax credits on capital purchases, such as equipment, vehicles, or real property used in the business, can still be claimed separately even while using the quick method. It is only the ordinary, recurring operating expenses, rent, supplies, subcontractors, software, where you give up the credit-by-credit tracking in exchange for the flat rate.

The remittance rates, and the extra 1 percent credit

The remittance rate depends on the type of business and the province. As at the time of writing, a typical Ontario service business remits roughly 8.8 percent of its HST-included sales, while a business that mainly purchases goods for resale, a retailer, remits a lower rate around 4.4 percent, reflecting the larger input tax credits a resale business would otherwise be giving up. Rates are set out in a CRA table and are worth confirming directly before you file, since the exact figure depends on your specific activity and can be adjusted over time.

There is also a 1 percent credit available on the first $30,000 of eligible sales included in the calculation, which further reduces what a small quick-method filer remits in its early years. This credit is modest in dollar terms for most businesses but is worth factoring into the comparison against the regular method.

As a simple illustration, an Ontario service business with $100,000 in HST-included sales in a year and the roughly 8.8 percent rate would remit about $8,800 to the CRA under the quick method, before the additional 1 percent credit on the first $30,000 of that total is applied. Under the regular method, the same business would instead calculate the full 13 percent HST collected and subtract whatever input tax credits its actual expenses generated, which could land above or below that $8,800 figure depending on how much it actually spent on taxable inputs during the year.

Confirm current rates against the CRA's quick method rate table before filing, since figures vary by activity and can change.

Who is eligible, and who is specifically excluded

To elect the quick method, your annual worldwide taxable supplies, combined with those of any associated business, generally must not exceed $400,000 including GST/HST for the relevant measuring period. Most small and mid-sized businesses fall comfortably under this ceiling. You also need to already be registered for GST/HST before the election means anything; see our answer on when you have to register for GST/HST if registration itself is still the open question.

A specific list of professions is excluded from using the quick method regardless of revenue, including businesses that provide accounting, bookkeeping, legal, financial consulting, and actuarial services. This means a firm like ours could not elect the quick method for our own GST/HST filings even if we wanted to, which is worth knowing if your business falls into one of these listed categories and you were hoping to simplify your filing this way.

Who tends to win, and who tends to lose

The quick method tends to favour service businesses with genuinely low overhead: consultants, freelancers, and similar operations that spend relatively little on taxable inputs. For these businesses, the input tax credits they are giving up would have been small anyway, so the flat rate, plus the 1 percent credit, often leaves more in the business than the regular method would.

• A low-expense consultant or freelancer is more likely to come out ahead using the quick method.
• A business with high input costs, heavy inventory purchases, significant subcontractor billing, or large recurring supply costs is more likely to lose out, since it forfeits input tax credits worth more than the rate reduction offers.
• A business making a large capital purchase in a given year is not automatically penalized, since capital input tax credits remain claimable under either method.

The only way to know for certain is to run the numbers both ways for your actual sales and expense mix rather than assuming based on industry alone; a business that looks like a typical service business on paper can still have enough taxable expenses to make the regular method the better choice. A business that rents an office, pays for a lot of subcontracted labour, or carries meaningful software and equipment costs should not assume the quick method wins just because it sells services rather than goods.

How to elect, and how we approach it for clients

Electing the quick method means filing Form GST74, the election or revocation for the quick method of accounting, and once elected you generally need to remain on it for at least a year before switching back. We model both the quick method and the regular method against a client's actual purchase history before recommending either one, rather than defaulting to whichever is simpler to administer. Our bookkeeping and GST/HST filing services include this comparison as part of ongoing return preparation, and we revisit it if a client's cost structure changes materially from one year to the next.