The GST/HST Quick Method: Is It Worth It for Your Business?

Once you’re registered for GST/HST, the default deal is: track the tax on every sale, track the tax on every purchase, remit the difference. Workable, but for a small service business with few expenses, it’s a lot of bookkeeping to arrive at a predictable number.

The CRA offers a shortcut: the Quick Method. You still charge your customers full GST/HST, but instead of tracking input tax credits receipt by receipt, you remit a flat percentage of your sales. For the right business it’s simpler and cheaper; for the wrong one it quietly costs money every quarter. Here’s how to tell which you are.

How the Quick Method Works

1. You charge customers exactly the same: 5% GST or your province’s HST. Nothing changes on your invoices
2. You remit a reduced flat rate on your GST/HST-included sales, instead of (tax collected − ITCs)
3. You keep the spread. The flat rate is set below the tax you collect precisely because you’re giving up most input tax credits. If your actual expenses are low, the spread beats the ITCs you gave up

Two sweeteners:

• A 1% credit on the first $30,000 of eligible sales each fiscal year (worth up to $300 off your remittance)
• Capital purchases keep their ITCs: you still claim equipment, computers and vehicles separately

Who Can Use It

• Annual worldwide taxable sales of $400,000 or less (GST/HST included, you plus associates)
• In business for at least a year, or a new registrant expecting to stay under the limit
• Not on the excluded-professions list: accountants, bookkeepers, lawyers, financial consultants and actuaries must use the regular method (make of that what you will)

You elect in with Form GST74 (or through your CRA My Business Account), generally effective from the start of a reporting period, and must keep the method for at least a year.

The Rates

The remittance rate depends on what you sell and where. Here are the two most common situations:

(The full matrix, covering cross-province sales and other HST provinces, lives in CRA guide RC4058; your rate can differ if you sell into a province other than your own.)

The Math: A Worked Example

An Ontario consultant bills $100,000 + 13% HST = $113,000 collected. Business expenses are modest: $8,000 + HST (about $1,040 of input tax).

Regular method: remit $13,000 − $1,040 = $11,960

Quick Method: $113,000 × 8.8% = $9,944, minus the 1% credit ($300) = $9,644

The Quick Method wins by ~$2,300 a year, and that’s before counting the bookkeeping time not spent chasing receipts for ITCs. The break-even logic: the Quick Method wins whenever your forgone ITCs are smaller than the spread between tax collected and the flat remittance.

Who Should Not Use It

• Expense-heavy businesses: retailers with thin margins, construction with heavy materials, anyone whose input tax rivals their output tax
• Zero-rated sellers and exporters: you collect little or no GST/HST but pay plenty; the regular method refunds you, the Quick Method can’t
• Businesses about to invest big in inventory or services (capital assets keep their ITCs either way, but operating costs don’t)
• Anyone on the excluded list above

Common Mistakes

1. Charging customers the reduced rate. You always charge full GST/HST; the flat rate is only what you remit
2. Applying the rate to pre-tax sales. The remittance rate applies to tax-included revenue ($113,000, not $100,000)
3. Forgetting the 1% credit on the first $30,000; it’s yours every fiscal year
4. Staying on the Quick Method after the business changed. The election that saved money as a lean consultancy can cost money once you’re carrying real expenses, so re-run the math yearly
5. Missing the $400,000 ceiling as you grow: cross it and you’re back to the regular method

How Odiverse Helps

The Quick Method decision is just arithmetic, if you have clean numbers for tax collected and input tax paid. Odiverse gives you both without trying: every invoice carries its GST/HST split, incoming bills are read by OCR and booked with the tax separated, and your rolling revenue is tracked against thresholds: the $30,000 registration line and the $400,000 Quick Method ceiling alike. Ask “what did I collect and pay in GST this year?” and the answer is a report, not a weekend. For the wider filing picture, see our GST/HST guide for Canadian small businesses.

Frequently Asked Questions

What is the GST/HST Quick Method? A simplified CRA accounting option where you charge customers full GST/HST but remit a reduced flat percentage of your tax-included sales, instead of tracking input tax credits on every purchase.

Who qualifies for the Quick Method? Businesses with $400,000 or less in annual taxable sales (GST/HST included), excluding certain professions: accountants, bookkeepers, lawyers, financial consultants and actuaries.

Do I still charge 13% HST if I use the Quick Method in Ontario? Yes. Your invoices don’t change; only the amount you remit to the CRA does (8.8% of tax-included sales for services).

Can I claim any input tax credits on the Quick Method? Yes, on capital purchases like equipment and vehicles. Everyday operating expenses are what you give up (that’s what the reduced rate compensates for).

How do I elect the Quick Method? File Form GST74 or elect through CRA My Business Account, effective from the start of a reporting period. You must keep the method for at least a year.

Run Your Numbers

Low expenses and under $400,000? The Quick Method probably pays you for filing less paperwork. Heavy inputs or zero-rated sales? Stay regular. Either way, the decision is easy when the books keep themselves. Try Odiverse free or see how it works for Canadian freelancers.