GST/HST Quick Method: Rates, Election and When It Pays

How does the GST/HST Quick Method work?

Under the Quick Method of Accounting, a GST/HST registrant charges customers the full tax, then remits a CRA percentage of its tax-included sales instead of the tax collected less input tax credits (ITCs). The percentage is lower than the tax charged, so the registrant keeps the difference, and the CRA says that kept part is reported as income (CRA Guide RC4022). In return it gives up ITCs on most purchases, because the rates already allow for them (CRA Guide RC4058).

The Quick Method is open to a registrant whose sales stay within $400,000 and whose line of business is not excluded. It is not automatic: the registrant elects it with the CRA. Whether it saves money depends on the province, services versus goods, and how much tax the business pays on purchases. For example, an Ontario business providing services, on a sale taxed at 13% HST, remits 8.8% of the tax-included sale; a British Columbia business providing services, on a sale taxed at 5% GST, remits 3.6%. The full tables are below.

A case is not simple when:

• Sales are near the limit, or an associate also sells, such as a corporation and the person who controls it.
• The business gives bookkeeping, tax, legal, accounting or actuarial services, which are excluded.
• It sells both goods and services, or sells in more than one province.
• It buys a lot of stock, materials or subcontracted work that carries tax.
• It wants to start part-way through a fiscal year, or to leave soon after starting. The election must run at least one year before it can be revoked.
• It is located in Québec.

Gather before deciding: sales including tax for each of the last five fiscal quarters; purchases with tax, split into operating costs, stock for resale and capital buys; the province of the permanent establishment; the filing frequency and fiscal year-end; and the sales of any associated business.

Who can use the Quick Method, and who cannot?

A registrant can elect the Quick Method if it passes the tests below and is not an excluded business (RC4058).

Associates count. RC4058 treats a person as generally associated with another where one controls the other, so a corporation and the person who controls it add their sales together for the limit.

These businesses cannot use the Quick Method:

• Providers of bookkeeping, financial consulting, tax consulting or tax return preparation services, in the course of their commercial activities.
• Providers of legal, accounting or actuarial services, in the course of their professional practice.
• Listed financial institutions and charities.
• Public institutions and public-sector bodies: municipalities, public colleges, school authorities and universities that are established and operated other than for profit, hospital authorities, facility operators, external suppliers, and non-profit organizations with at least 40% government funding in the year. Some of these can use the CRA's separate special quick method for public service bodies instead.

RC4058 has the full list. A business close to one of these lines, such as one that does some bookkeeping or tax work for others, needs it checked before it elects. The Regulations test the bookkeeping, tax and professional-service exclusions over the four fiscal quarters before the period, so recent work counts too (Regulations, s. 15(1)).

What are the Quick Method rates, and what is the Ontario rate?

An Ontario business providing services, on a sale that carries Ontario's 13% HST, remits 8.8% of the tax-included sale. An Ontario business buying goods for resale remits 4.4% on the same sale. An Alberta reseller of goods, on a sale that carries 5% GST, remits 1.8%.

The rate comes from a CRA table. The table depends on whether the business provides services or buys goods for resale. The column depends on the province of the business's permanent establishment, which RC4058 describes as a fixed place of business, including an office, branch, factory or workshop. A business with no such place, such as a home-based one, should settle where its permanent establishment is before choosing a column. The row depends on the GST or HST that applies to the sale (RC4058).

Apply the rate to tax-included sales, not to the price before tax. The row follows the tax on the sale, which follows the place-of-supply rules, so it is not always the business's own province. See which GST/HST rate goes on the invoice.

Rates for businesses that provide services

Rates for businesses that buy goods for resale

In the goods table, a nil rate with a credit means the business remits nothing on those sales and claims the credit shown, on those sales, on line 106 of the return.

Nova Scotia uses its own column for periods on or after April 1, 2025. Earlier periods use the New Brunswick, Newfoundland and Labrador and Prince Edward Island column. Québec is not in the table; see the Québec section below.

RC4058 sets a 90% test on where a business's eligible supplies (taxable sales other than zero-rated sales, sales made outside Canada, and sales of real property or capital assets, plus a few others RC4058 lists) are made through a permanent establishment in a reporting period. If that share or more is made in one HST province (or in HST provinces with the same rate), or in GST-only provinces, one rate applies: the rate that would apply if all of those supplies were made there. Otherwise the business may have to use more than one rate.

Do I use the services rates or the goods-for-resale rates?

A business uses the goods-for-resale rates only if the cost of goods it bought for resale in its previous fiscal year was at least 40% of its total annual taxable sales, with GST/HST counted on both sides. A business that starts the Quick Method in its current fiscal year measures the same share over the first four or the last four of its previous five fiscal quarters instead of its previous fiscal year. Every other business uses the services rates (RC4058).

Goods bought to use in products the business makes for sale count as goods bought for resale. Basic groceries and purchases that carry no tax do not count. Associates' sales are left out of this test.

RC4058 applies the test to the whole business, not to each product line. A business that sells both goods and services should run the numbers for both sets of rates before it elects.

What is the Quick Method credit on the first sales each year?

A registrant on the Quick Method gets a credit of 1% of the first $30,000 of tax-included sales from eligible supplies in each fiscal year. It goes on line 107 of the return (RC4058).

The credit requires the election to be in effect at the start of the fiscal year or, for a new registrant, on the day of registration. An existing monthly or quarterly filer that starts part-way through a fiscal year therefore earns no credit for that year. An unused part cannot be carried to a later year.

Which input tax credits can I still claim?

A registrant on the Quick Method can still claim ITCs on a short list of purchases, and none on operating costs or inventory. The CRA says that under the Quick Method you cannot claim ITCs for your operating expenses (CRA: Input tax credits).

RC4058 allows ITCs on:

• Purchases of real property and improvements to real property.
• Capital assets other than real property, and improvements to them.
• Purchases whose tax became payable before the election took effect, while the claim time limit has not run out.
• Goods sold for you by an auctioneer or agent who must account for the tax, and certain goods transferred to you by a non-resident.

These credits go on line 106. The usual use tests still apply to the real property and capital asset credits. For which expenses carry partial or no credit under the regular method, see expenses with no or partial ITC.

When does the Quick Method pay, and when does the regular method win?

The Quick Method pays when the tax you would recover on purchases under the regular method is smaller than the gap between the tax you collect and the tax you remit. The regular method wins when purchases that carry tax are large.

Compare two figures for the same period:

1. Quick Method: tax-included eligible sales times the rate, less the first-sales credit, less ITCs on capital and real property purchases.
2. Regular method: GST/HST collected less ITCs on every purchase that carries tax, operating costs and inventory included.

The lower figure shows which method means less GST/HST payable for that period. It is not the whole decision, because the Quick Method also changes income: the tax kept is added to it (for a sole proprietor, on the T2125: CRA Guide T4002). Recording the Quick Method, and where the kept amount goes for a corporation, are in Quick Method in your books.

Compare a full typical year, not one quarter. The one-year minimum also matters: a registrant cannot revoke until the election has been in effect at least one year.

How and when do I elect the Quick Method?

A registrant elects online in My Business Account (business owners) or Represent a Client (representatives), or by completing Form GST74: Parts A, B and D, signed by an authorized person, and sent to your tax services office only if you do not use the online service. The start date has to be the first day of a GST/HST reporting period (RC4058).

1. Check the tests. Confirm the sales limit, the 365 days in business, and that the business is not excluded.
2. Choose the start date. It must be the first day of a reporting period. Your reporting period and fiscal year set the dates; see reporting period and fiscal year.
3. Elect by the deadline for your filing frequency, shown in the table below.
4. Keep the proof. Keep the date you chose and a copy of the election.

For an annual filer the reporting period is the fiscal year (Excise Tax Act, s. 245), so the start date is the first day of a fiscal year, and the deadline is the first day of the second fiscal quarter of that same year (Excise Tax Act, s. 227(2)).

The CRA can accept an election after these dates, but only if you apply and it agrees (Excise Tax Act, s. 227(2)).

A business that has just registered can find the registration rules in when to register for GST/HST.

How do I know the CRA accepted my Quick Method election?

Neither RC4058, the GST74 page nor the form itself describes a confirmation, acknowledgement or acceptance step for a Quick Method election. You start on the effective date you gave the CRA, which has to be the first day of a reporting period, and the CRA can still verify eligibility and disallow the election at audit (RC4058).

Before filing a return on the Quick Method basis:

• Check that the start date you gave is the first day of a reporting period.
• Check that the business met the tests on that date and elected by the deadline for its filing frequency.
• Ask the CRA to confirm the effective date it holds for your account.

A message that the election was submitted does not, by itself, show that the date and the tests were right. A return filed on the wrong method is a mistake to correct later: see correcting a filed GST/HST return.

What goes on the GST/HST return under the Quick Method?

The Quick Method changes what goes on lines 101, 103, 106 and 107 (RC4058).

The GST/HST on supplies that are not eligible, defined above, is accounted for in the regular way.

A registrant filing electronically on the Quick Method does not choose the option to fill in lines 90, 91 and 102. If line 101 does not match your sales in the books, see why the return does not match the books. For the regular lines, see filing GST/HST and input tax credits.

What happens if my sales pass the limit, and how do I leave?

The election stays in effect while sales stay within the limit, and ends on dates RC4058 sets once they pass it. A registrant can also revoke it by choice, but only after one year (RC4058).

To leave by choice:

1. Wait until the election has been in effect for at least one year. The one exception on Form GST74 is a business that no longer meets the tests, whose election ends as in the table above.
2. Revoke in My Business Account or Represent a Client, or on Form GST74 (Parts A, C and D), by the due date of the return for the last reporting period you want to use the method. The revocation takes effect on the first day of a reporting period (Excise Tax Act, s. 227(4.1)).
3. Wait at least one year from the date the revocation takes effect before electing again.

However the election ends, whether you revoke it, your sales pass the limit or the business becomes excluded, you cannot later claim ITCs on tax paid on purchases made while it was in effect, except credits you were entitled to claim under it and did not (Excise Tax Act, s. 227(3) and (5); Regulations, s. 22). Tax paid on operating costs and stock during the election stays unrecovered.

I am in Québec: do the CRA steps on this page apply to me?

If your business is located in Québec, the CRA's election steps on this page generally do not apply as written. Revenu Québec generally administers the GST/HST there, and RC4058 says that if the physical location of your business is in Québec, you file your returns with Revenu Québec using its forms, with an exception for selected listed financial institutions (RC4058).

The CRA table, steps and forms in this guide are the CRA's. The QST is Québec's own tax, and this guide does not cover Revenu Québec's election, which may also involve the QST, or its rates and deadlines. Check Revenu Québec's instructions before electing. A business outside Québec with Québec customers or workers should read doing business in Québec from another province.

Example

These examples are illustrative. All amounts are in Canadian dollars (C$). The first two assume the election is in effect from the first day of the fiscal year, so the C$300 credit applies.

An Ontario designer: Quick Method against the regular method

An Ontario graphic designer, not in an excluded line of business, bills C$150,000 plus 13% HST of C$19,500, so tax-included sales are C$169,500. Operating costs are C$10,000 plus C$1,300 HST.

The Quick Method remits C$3,584 less for the year. With no capital purchases, the regular method would win only if purchases carrying 13% HST reached about C$42,500 including tax, roughly a quarter of sales. The figures compare GST/HST payable only. Under the Quick Method the C$4,884 kept (C$19,500 less C$14,616, which includes the C$300 credit) is income, and the C$1,300 of HST on costs becomes an ordinary expense, so taxable income is about C$3,584 higher and the gain after income tax is smaller. The books guide covers that.

An Alberta reseller: the regular method wins

An Alberta online reseller ships only to customers in GST-only provinces, so every sale takes the 1.8% row. It sells C$300,000 of goods plus C$15,000 GST, so tax-included sales are C$315,000. Stock costs C$220,000 plus C$11,000 GST. With the same figures in its previous fiscal year, the stock with GST is about 73% of tax-included sales, above the 40% test, so the goods rate applies. Sales shipped into HST provinces would take higher rates from the same table.

• Quick Method: 1.8% times C$315,000 is C$5,670, less the C$300 credit, so C$5,370.
• Regular method: C$15,000 collected less C$11,000 ITCs, so C$4,000.

The regular method remits C$1,370 less, because the reseller's stock purchases carry a large share of the tax.

A contractor passes the limit

A contractor with a calendar fiscal year has had a Quick Method election in effect since January 1 of Year 1. Sales including tax total C$420,000 for Year 1, over the limit.

• If the contractor files quarterly: it stays on the Quick Method through the first quarter of Year 2 and moves to the regular method on April 1 of Year 2, the beginning of the second fiscal quarter.
• If the contractor files annually: it moves to the regular method on January 1 of Year 2.

From that date the contractor claims ITCs on the purchases it makes. Tax on purchases made during the election stays unrecovered.

Different for you?

• Your sales are close to the limit, or you and a corporation you control both sell: associates' sales count together, and the end dates depend on your filing frequency. Work out the numbers and the start date before you elect, with help comparing the two methods.
• You sell both goods and services, or sell across provinces: the goods-purchase test, the column and the row can each change the rate, so the comparison has to be run on your own sales and costs. See bookkeeping help.
• You want to switch, or to leave soon after starting: the one-year minimum and the one-year wait to re-elect make a wrong start costly. See setting up the change in your books.
• You missed the election deadline, or filed a return on the wrong method: the CRA can allow a later election only on application, and until it does the effective date and the return may both need to be fixed, and the books reworked to match. See correcting a filed GST/HST return and bookkeeping help.
• You already use the Quick Method and need to record it: see Quick Method in your books and GST/HST in your books.
• You provide bookkeeping, tax, legal or accounting services: RC4058 excludes persons who provide these in the course of their commercial activities or professional practice, so settle whether your work falls inside that line before you elect. See filing GST/HST and input tax credits.
• You have not registered yet: see when to register for GST/HST.
• You are in Québec: deal with Revenu Québec for the election and the return, and read doing business in Québec from another province if you sell into it from elsewhere.