The GST/HST quick method, explained

The quick method is a shortcut the CRA offers small businesses. You still charge customers the full GST or HST. But instead of tracking the tax on every purchase and claiming it back, you send the CRA a fixed percentage of your tax-included sales and keep the rest.

For a business with low expenses, such as a consultant, a designer or a trade doing mostly labour, it often means sending less tax than the regular method and doing less work. For a business with heavy expenses, it usually costs more. Below is how to tell which one you are, with the arithmetic.

Everything here comes from the CRA's guide RC4058, Quick Method of Accounting for GST/HST.

Who can use it

You can elect the quick method if:

• Your annual worldwide taxable supplies, including the GST/HST and those of your associates, are not more than $400,000. The test looks at your last five fiscal quarters. You qualify if either the first four or the last four come in at $400,000 or less. Leave out financial services and sales of real property, capital assets and goodwill.
• You have a permanent establishment in Canada.
• Your business isn't on the excluded list.

The excluded list matters, because some of the businesses that would gain most from the quick method are on it. You can't use it if you provide:

• bookkeeping, financial consulting, tax consulting or tax return preparation services
• legal, accounting or actuarial services in a professional practice

Listed financial institutions, charities, public institutions and some non-profits are excluded too.

A new business can elect if it reasonably expects its first full year of taxable supplies, with associates, to be $400,000 or less.

How it works

You charge GST or HST as normal. Then, for each reporting period:

1. Take your sales including the GST/HST.
2. Multiply by your remittance rate.
3. Subtract the 1% credit on the first $30,000 of the year's eligible sales.
4. Add back GST/HST on anything outside the quick method (see below), and subtract ITCs on capital purchases.

You don't claim input tax credits on your operating expenses or on inventory. The remittance rate already allows for them. You can still claim ITCs on capital purchases: real property, and equipment such as computers and vehicles.

The remittance rates

The rate depends on where your permanent establishment is, where your customers are, and whether you mostly resell goods or provide services.

You can use the lower "goods for resale" rates only if your purchases of goods for resale, including the tax, came to at least 40% of your tax-included taxable sales in the previous fiscal year. Retailers, convenience stores, gas stations and boutiques usually qualify. Everyone else uses the services rates.

These are the rates for the most common case, where you sell to customers in the same province your business is in. They're from the tables in RC4058:

Business in a GST-only province or territory (Alberta, British Columbia, Manitoba, Saskatchewan, Yukon, Northwest Territories, Nunavut), charging 5% GST:

• Services: 3.6%
• Goods for resale: 1.8%

Business in Ontario, charging 13% HST:

• Services: 8.8%
• Goods for resale: 4.4%

Business in Nova Scotia, charging 14% HST (the rate since April 1, 2025):

• Services: 9.4%
• Goods for resale: 4.7%

Business in New Brunswick, Newfoundland and Labrador or Prince Edward Island, charging 15% HST:

• Services: 10.0%
• Goods for resale: 5.0%

If you sell into other provinces, a different rate applies to those sales. For example, an Ontario services business selling to a customer in Alberta uses 1.8% on that sale, and an Alberta services business selling into Ontario uses 10.5%. The full grid is in RC4058.

Quebec businesses generally deal with Revenu Québec for GST/HST, not the CRA, so these tables aren't the place to start.

The 1% credit

You get a 1% credit on the first $30,000 of eligible tax-included sales in each fiscal year. That's up to $300 a year. It goes on line 107 of the return.

To get it, your election has to be in effect at the start of the fiscal year, or from the day you registered if you're new. If you file quarterly, it applies in your first quarter (and later quarters) until you've used up the $30,000. An unused credit doesn't carry forward.

Worked example 1: an Ontario consultant

A management consultant in Ottawa bills $90,000 a year and charges 13% HST of $11,700. Tax-included sales are $101,700. Taxable expenses (software, phone, supplies, some travel) are $12,000 before HST, carrying $1,560 of HST.

Regular method: $11,700 collected − $1,560 ITCs = $10,140 to remit.

Quick method: $101,700 × 8.8% = $8,949.60, less the $300 credit = $8,649.60 to remit.

The quick method leaves $1,490.40 more with the business, and there are no ITCs to track.

Where's the break-even? The quick method wins as long as the ITCs you'd otherwise claim are less than $11,700 − $8,649.60 = $3,050.40. At 13%, that's about $23,465 of taxable expenses before tax. Spend more than that on taxable purchases and the regular method starts to win. That calculation leaves out capital purchases, because you claim those under either method.

Worked example 2: an Alberta shop

A gift shop in Calgary has $210,000 of sales including 5% GST. It bought $120,000 of stock plus $6,000 GST, so purchases for resale are 60% of sales and the goods rate applies. Other taxable expenses are $20,000 plus $1,000 GST.

Regular method: GST collected is $210,000 × 5 ÷ 105 = $10,000. ITCs are $6,000 + $1,000 = $7,000. Net tax is $3,000.

Quick method: $210,000 × 1.8% = $3,780, less $300 = $3,480.

Here the regular method is $480 cheaper. Low-margin, high-purchase businesses often land on this side. Run your own numbers before you elect: the Quick Method calculator compares both methods for you.

What's excluded from the calculation

Some sales stay on the regular method even while you're on the quick method. You report the full tax on them, not a percentage:

• sales of real property and capital assets
• zero-rated supplies and supplies made outside Canada (no tax is charged on these, so they're left out of the line 101 total)
• a few special cases: certain sales as an agent or auctioneer, and taxable benefits to employees or shareholders

Electing, and getting out

Elect in My Business Account, or file Form GST74. The effective date has to be the first day of a reporting period.

• Annual filers must elect by the first day of the second fiscal quarter.
• Monthly and quarterly filers must elect by the due date of the return for the first period they use it.

Once you're in, you have to stay at least one year before you can revoke. After revoking, you have to wait a year to elect again. If you go over $400,000, the election ends and you move back to the regular method. RC4058 sets out exactly when.

Two things people miss

You still keep all your records. RC4058 is explicit: you have to keep books and records for your purchases and sales for six years, quick method or not.

The tax you keep is income. The CRA's self-employment guide has sole proprietors include the quick-method difference, and the 1% credit, as government assistance in their business income on T2125. In the consultant example, the $1,490.40 saving is taxed as income. It's still a saving, just a smaller one than it first looks.

How it shows on the return

On a quick method return, line 101 is your tax-included eligible sales, not sales before tax as on the regular method. Line 103 is line 101 times your remittance rate, plus the full tax on any excluded supplies. Line 106 holds ITCs on capital purchases only. Line 107 holds the 1% credit. How to file a GST/HST return covers the rest of the form.

Running the comparison in Spark Books

The honest way to choose is to run both methods on your real numbers. Spark Books works out your GST/HST return figures under the regular method and the quick method from the same books, so you can see the difference before you elect. It shows the due date and prepares the figures. You or your accountant file. It's free, and you don't need a card.