The Quick Method of accounting for GST/HST

How it works

Under the regular method you remit the tax you collect minus the input tax credits (ITCs) on your expenses. Under the Quick Method you still charge customers the full GST/HST rate, but you remit a set percentage of your tax-included sales instead of tracking ITCs on day-to-day expenses. The remittance rate depends on your province and on whether you mainly provide services or resell goods.

• You can still claim ITCs on capital purchases such as equipment and real property.
• A 1% credit applies to the first $30,000 of eligible supplies each fiscal year.
• The difference between tax collected and tax remitted is business income for income tax purposes.

Who can use it

Businesses with a permanent establishment in Canada and annual worldwide taxable supplies of $400,000 or less, including GST/HST and the supplies of associated businesses, can generally elect to use it through CRA online services or Form GST74. Revenue from financial services and sales of real property, capital assets and goodwill is excluded from the test. Once elected, the method must stay in effect for at least one year before you can revoke it.

It is not available to businesses providing bookkeeping, financial consulting, tax consulting or tax return preparation services, to legal, accounting or actuarial practices, or to listed financial institutions, charities and most public service bodies.

Is it worth it?

The Quick Method tends to benefit service businesses with low taxable expenses. If you have significant expenses that carry GST/HST, the regular method may leave you better off. Run both calculations on last year's figures before electing.