Understanding the Quick Method for HST: What It Is and How It Can Benefit Your Business

Understanding the Quick Method for HST: What It Is and How It Can Benefit Your Business 0

Posted On October 9, 2025, by Ann-Marie Powell

For many small business owners, managing HST can feel overwhelming—especially when it comes to tracking input tax credits and filing returns. If you are unsure whether you should be charging HST/GST in the first place, check out our previous article. Once you are registered and looking for a simplified way to meet your HST obligations, the Quick Method of Accounting may be a suitable alternative.

In this article, we explain what the Quick Method is, who qualifies, and how it works. We also highlight when this method may not be the best fit, so you can make an informed decision about whether it is right for your business.

What is the Quick Method?

The Quick Method is a simplified way for small businesses to handle HST. Normally, businesses track the HST they pay on purchases (input tax credits, or ITCs) and subtract that from the HST they collect from customers before remitting the difference to the CRA. Under the Quick Method, you do not claim ITCs on most of your business purchases, but instead remit a lower percentage of your taxable sales than the HST you collected from customers.

This method is designed for service-based and retail businesses with relatively low input costs. It simplifies HST administration and can be more advantageous for eligible small businesses.

Why Use the Quick Method?

The primary benefit of the Quick Method is simplicity. Businesses do not need to track and calculate input tax credits on most purchases for their own business. Instead, they collect HST at the applicable rate, such as 13% in Ontario, on sales to customers. They then remit a reduced percentage of those sales to the CRA. The difference between the amount collected and remitted may be retained by the business. This can provide a potential financial benefit.

Key benefits include:

Simplified recordkeeping: No need to track most input tax credits.
Potential cost savings: In many cases, the remittance rate is lower than the tax collected.
Administrative efficiency: Reduces time spent on calculations and filing returns.

However, it is important to analyze your specific situation. Businesses with significant expenses (and therefore higher input tax credits) may not benefit from this method and may be better served by using the standard method.

Who Can Use the Quick Method?

To use the Quick Method, your business must meet the following criteria:

You are a GST/HST registrant.
Your annual worldwide taxable sales (including those of your associates) are $400,000 or less in the last four consecutive fiscal quarters (excluding GST/HST).
You are not in one of the excluded professions or industries (e.g., accountants, lawyers, financial consultants, and listed financial institutions are not eligible).
You make the election in writing using Form GST74: Election and Revocation of an Election to Use the Quick Method of Accounting.

Eligibility also varies based on your type of business and where your supplies are made, which determines your applicable remittance rate.

How Does It Work?

If you choose to use the Quick Method, here’s a high-level overview of the steps:

Charge HST as usual– Continue to charge your clients the full HST rate based on their province (e.g., 13% in Ontario).
Apply the CRA’s remittance rate– Use the prescribed Quick Method remittance rate (which is lower than the rate you charge) to your taxable sales, including the HST collected.
Claim your 1% credit– In addition, you are entitled to a 1% credit on the first $30,000 of eligible supplies (including HST) in each fiscal year, provided your Quick Method election is in place at the start of that fiscal year (or, for new registrants, on the date of registration).
Remit to the CRA– Remit the reduced amount, factoring in the 1% credit.
Keep the difference– The difference between the HST collected and the amount you remit (after applying the credit) is considered income.
Input tax credits– You generally do not claim ITCs on your day-to-day expenses, but you may still claim them on certain capital purchases (e.g., equipment and vehicles).

To start using the Quick Method, you need to formally elect with the CRA. The timing depends on how often you file GST/HST returns:

Annual filers– Make the election by the first day of your second fiscal quarter.
Monthly or quarterly filers– Make the election by the due date of the return for the reporting period in which you begin using the Quick Method.
New registrants– If your first return covers less than a full fiscal year, you must elect by the due date of that return.

Your chosen start date must always be the first day of a reporting period. And if you’ve revoked the Quick Method before, you’ll need to wait at least one year before electing again

Example in Ontario

Suppose you operate a small graphic design business in Ontario and have elected to use the Quick Method. You invoice a client $1,000 plus 13% HST, for a total of $1,130.

Here’s how the Quick Method works, including the 1% credit:

HST collected: $130 from your client.
Quick Method remittance rate: For most service-based businesses in Ontario, the rate is 8.8% of the total amount collected. $1,130 × 8.8% = $99.44.
1% credit on first $30,000 of revenue: $1,130 × 1% = $11.30.
Total remittance to CRA: $99.44 − $11.30 = $88.14.
Income retained: $130 − $88.14 = $41.86, which is reported as business income for tax purposes.
Input tax credits: You do not claim ITCs on most expenses, but you may claim them on certain capital purchases like equipment or vehicles.

Note: Remittance rates and eligibility for the 1% credit vary by type of business (services vs. goods) and the province where the supply is made. The CRA provides detailed remittance rate tables on its website.

What to Watch Out For

While the Quick Method can be advantageous, it is not ideal for every business. If your business has many expenses, the standard method may generate significant input tax credits. In such cases, you may be financially better off not using the Quick Method.

In addition:

You must formally elect to use the method with CRA before it applies.
Once elected, you must generally continue using the method for at least one year unless you become ineligible.
If you wish to revoke the election to use the quick method, you must do so by the GST/HST return’s due date. This applies to the last reporting period for which you want to use the quick method.
If you stop using the quick method, you must wait at least one year before electing to use it again.
Capital purchases are still eligible for input tax credits, but day-to-day operating expenses are not.

Consulting your accountant is essential before making this election. They can help compare both methods based on your business model, typical expenses, and forecasted revenues.

Final Thoughts

The Quick Method offers a simplified approach to HST remittance that can reduce administrative effort and potentially increase after-tax income for eligible small businesses. However, the financial benefit depends on the nature of your expenses and business structure.

Before making the Quick Method election, it is important to assess whether it aligns with your operations and long-term strategy. At GBA LLP, we work closely with our clients to determine the best HST reporting method for their specific needs. We also ensure compliance with CRA rules. Stay tuned for the next article in our HST series, where we will explore Place of Supply rules. These rules are another key consideration for determining how and where HST should be charged.

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This blog is not meant to provide specific advice or opinions regarding the topic(s) discussed above. Should you have a question about your specific situation, please discuss it with your GBA advisor.

GBA LLP is a full-service accounting firm in the Greater Toronto Area, but we primarily service all of Ontario as well as the rest of Canada virtually, except Quebec. Our team of over 30 provides audits and reviews of financial statements, compilations of financial information, and corporate tax returns. We provide specialized corporate tax and succession planning for small and medium businesses, in addition to general advisory services.</p>

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