The Quick Method is a simplified way to work out the GST/HST you send to the CRA. Instead of tracking the tax on every purchase, you remit a flat percentage of your tax-included sales and keep the difference. Any business with worldwide taxable revenue under $400,000 a year can elect it by filing Form GST74. For a labour-heavy trade with few taxable purchases, it can leave real money in your pocket. For a materials-heavy build, it usually does not.
How it actually works
Under the Quick Method you still charge clients GST or HST at the normal rate for your province. The difference is what happens at remittance time. Rather than subtracting the actual tax you paid on supplies (the regular input tax credit method, see Input Tax Credits, Explained), you apply a single CRA-set remittance rate to your total tax-included sales and send that amount to the CRA. The gap between the tax you collected and the smaller amount you remit is yours to keep. It is meant to roughly approximate the credits an average business in your category would have claimed, with less paperwork.
There is a trade-off built in: under the Quick Method you generally cannot claim input tax credits on your day-to-day operating costs, because the reduced remittance rate is supposed to account for them already. You can still claim credits separately on capital purchases such as a vehicle, a trailer or major equipment.
Who can elect it
- Your worldwide annual taxable revenue (including GST/HST) is $400,000 or less.
- You file Form GST74, Election to Use the Quick Method of Accounting, with the CRA.
- You are not in an excluded profession. Accountants, bookkeepers, lawyers, actuaries and financial institutions are barred from the Quick Method. Construction contractors and the trades are not on that excluded list, so they qualify.
The 1% credit
On top of the rate, the Quick Method gives you a 1% credit on the first $30,000 of eligible supplies in each fiscal year. It is a one-time annual credit, not a running total, worth up to $300 a year. It is a small but automatic sweetener for staying on the method.
Working out whether it pays
The remittance rate depends on where your business is and where you make your supplies. Trades fall under the services category, and the rate is lower than the tax rate you collect, which is where the saving comes from. As an illustration, a service business in Ontario collects 13% HST but remits at roughly 8.8% under the Quick Method, keeping about 4.2% of tax-included revenue. The exact rate for your province and situation is set by the CRA, and the published rates should always be confirmed against the current CRA guide RC4058, Quick Method of Accounting for GST/HST, before you rely on a number. Do not copy a remittance rate off a blog, including this one, without checking RC4058.
A worked illustration (Ontario, services)
A renovator in Ontario bills $200,000 of work plus 13% HST, so collects $26,000 of HST on $226,000 of tax-included sales. Applying the illustrative 8.8% service rate to the $226,000 gives a remittance of about $19,888, plus the method removes most operating-cost credits. The roughly $6,000 gap, less the credits given up, is the rough benefit, plus the $300 one-percent credit. The lighter your materials and the higher your labour, the better this looks. A builder buying large volumes of HST-bearing materials would claim big input tax credits the normal way and is usually better off on the regular method.
Common mistakes
- Electing it when you buy a lot of materials. Heavy material purchases mean large input tax credits you forfeit under the Quick Method. Run both methods first.
- Forgetting capital credits still count. You can still claim the credit on a van or major tool even on the Quick Method. Many people wrongly think they cannot.
- Trusting a rate you did not verify. Remittance rates differ by province and supply type and do get updated. Confirm yours on CRA guide RC4058.
- Assuming you can switch any time. You generally must stay on the method for at least a year, and there are timing rules for electing and revoking. Check before you flip.
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