Is the Quick Method of Reporting GST/HST & QST the Right Choice for your Small Business
If you are a self-employed individual or a small business in Canada with annual sales between $30,000 and $400,000, you are likely looking for ways to simplify your tax obligations. The Quick Method of reporting GST/HST and QST can be a great option to do just that. It's essentially a simplified alternative to the regular method of reporting sales taxes. While the regular method requires you to track and calculate every dollar of sales tax collected and paid (known as Input Tax Credits, or ITCs), the Quick Method allows you to apply a single, reduced rate to your total sales. The tradeoff is that you generally don't claim back taxes paid on expenses.
Below, I'll break down how the Quick Method works, its specific rates for service-based businesses, and provide a simple way to calculate if this method is worth it for your small business.
Quick Method Calculator for GST
Are You Eligible to Use the Quick Method?
The Maximum Taxable Sales Threshold
Your total taxable sales (including GST/HST) are $400,000 or less over a 12-month period
You exclude things like financial services, real estate sales, and selling business assets when doing this calculation
Your business has a permanent establishment in Canada
If your business is registered in Quebec, then the for QST purposes, your annual taxable sales be less than $418,952.
Business Types That Cannot Use the Quick Method
persons that provide book keeping, financial consulting, tax consulting or tax return preparation services in the course of their commercial activities e.g. bookkeepers, financial/tax consultations
persons that provide legal, accounting or actuarial services in the course of their professional practice i.e. accountants and lawyers
listed financial institutions
charities
public institutions
non–profit organizations with at least 40% government funding in the year (qualifying non–profit organizations)
See the full list of exceptions
How Does the Quick Method Compare to the regular Method?
With the regular method, you would charge your customers GST/HST (and QST in Quebec). The amount that you collect must then be remitted to Revenue Canada (CRA) when you file your GST/HST Return. You are also allowed to claim back GST/HST paid on expenses.
With the Quick Method, you would still charge your customers GST/HST (and QST in Quebec). However, the amount that you have to remit to CRA is at a lower rate. The tradeoff is that you are not permitted to claim sales taxes paid on expenses.
Example Calculation of Regular Method vs quick Method:
Assume an Ontario-based service business with:
$100,000 in sales (before HST)
13% HST, so $13,000 collected
$20,000 in expenses, on which HST was paid
Regular Method
Under the regular method:
HST collected: $13,000
HST paid on expenses:
$20,000 × 13% = $2,600 (claimed as ITCs)
HST remitted to CRA:
$13,000 − $2,600 = $10,400Quick Method
Under the Quick Method (service-based business in Ontario):
You calculate remittance based on total sales including HST
Total sales including HST:
$100,000 + $13,000 = $113,000Quick Method remittance rate: 8.8%
Plus a 1% credit on the first $30,000 of sales
Step 1: Calculate the Quick Method amount
$113,000 × 8.8% = $9,944Step 2: Apply the 1% credit
$30,000 × 1% = $300HST remitted to CRA:
$9,944 − $300 = $9,644The Difference
Regular Method: $10,400
Quick Method: $9,644
Savings using the Quick Method: $756
From the example above, we can see that if you have a service based business, with low taxable expenses, you can save money by using the Quick Method.
Is GST/HST Paid on Capital Assets Claimable Under the Quick Method?
Under the Quick Method, GST/HST paid on day-to-day expenses is generally not recoverable. However, GST/HST paid on capital assets, such as a car, computer, or real property, can still be claimed, which helps offset larger one-time purchases.
Below is a brief explainer video, with example, of how the Quick Method works.
What are the Quick Method Rates
The Quick Method rates you use depend on what you sell and where you are located.
If 40% or More of Your Sales Are From Goods Purchased for Resale
If 40% or more of your sales come from goods purchased for resale (that is, tangible items you buy and resell — such as vehicles, furniture, inventory, or animals):
GST Quick Method rate: 1.8%
QST Quick Method rate: 3.4%
If Less Than 40% of Your Sales Are From Goods (Service-Based Businesses)
If less than 40% of your sales are from goods purchased for resale (in other words, you are effectively a service-based business):
GST Quick Method rate: 3.6%
QST Quick Method rate: 6.6%
1% Credit on the First $30,000 of Sales
For both GST and QST, you are eligible for a 1% credit on the first $30,000 of sales when using the Quick Method.
If You Charge HST
If you charge HST, the Quick Method rates vary by province, so the applicable rate depends on where your business is located.
Important Clarifications
The Quick Method does not change the tax rate you charge your customers.
You still charge:5% GST
9.975% QST
The Quick Method rate is applied to your total sales including the tax.
As shown in the example above, the rate is applied to $113,000 (sales + tax) — not $100,000.
How to Start Using the Quick Method
To start using the Quick Method for GST and HST anywhere in Canada , except Quebec, you must complete election GST74 Election and Revocation of an Election to use the Quick Method of Accounting. The application can also be made using CRA My Business Account
To use the Quick Method in Quebec for both GST and QST ,you must complete form FP-2074-V, Election Respecting the Quick Method of Accounting for Small Businesses, and file it with Revenu Québec. Acceptance of the election will be confirmed in writing.
The deadline for the application for the Quick Method are as follows:
For Quarterly or monthly returns, it must be before the due date of the filing. For example, if you file quarterly and your due date is April 30th for the period from January 1st to March 31st, the election must be filed by April 30th.
For annual returns it must be no later than the first day of the second quarter. This would be April 1st for all businesses with a year end of December 31st. For any other year end date that is not the calendar year, the due date for the election is three months + 1 day after the year end.
Once the election has been approved, it can be revoked (reversed) after waiting for a minimum of one year.
When to Use the Quick Method
Because the Quick Method is simpler than the regular GST/HST and QST reporting method, it can be an effective way to meet your sales tax obligations while reducing bookkeeping time and complexity.
The Quick Method generally makes sense if you:
have low taxable expenses, and
have high sales relative to your expenses
In these situations, the Quick Method can result in both time savings and lower net tax remittances.
As shown in the example above and using the Quick Method calculator below, a service-based business with:
$50,000 in sales, and
$5,000 in taxable purchases
would save approximately $660 by using the Quick Method. Over time, these savings can add up.
This example assumes a service-based business using the 3.6% GST Quick Method rate.
Quick Method Calculator for GST
When Not to Use the Quick Method
The Quick Method is not always the best choice.
Businesses with higher taxable expenses, particularly startups, may actually pay more under the Quick Method because they give up the ability to claim full input tax credits on those expenses.
Using the same calculator above, if your taxable expenses increase to $20,000, the Quick Method would result in a higher remittance than the regular method.
For this reason, it’s important to estimate your taxable expenses before electing the Quick Method.
That said, for businesses with minimal ongoing expenses such as many consultants, programmers, and contractors (as long as you don’t fall under the exceptions list noted above) the Quick Method can be a very practical and cost-effective option.
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