Quick Method vs Regular Method for GST/HST: Which Saves You More?

The Quick Method lets a small Canadian business remit a flat percentage of its GST/HST-included sales instead of tracking input tax credits on every operating expense. You still charge tax at the normal rate. You keep the difference. It is worth electing when your taxable operating costs are low relative to revenue - in practice, under roughly $25,000 a year.

The 60-second version

What it is: a simplified GST/HST accounting method under the Streamlined Accounting (GST/HST) Regulations. You charge customers the normal 5% GST or 13%/14%/15% HST, then remit a lower flat rate applied to your tax-included revenue.[1][4]
Who qualifies: registrants with a permanent establishment in Canada whose worldwide taxable supplies, including those of associates and including the GST/HST, are $400,000 or less over four consecutive quarters of the last five.[1]
Who cannot use it: accountants, bookkeepers, lawyers, actuaries, tax preparers and financial or tax consultants are explicitly barred, along with listed financial institutions, charities, municipalities, public colleges and hospital authorities.[1]
The catch: you give up input tax credits on operating expenses. You keep them on capital purchases such as computers and vehicles.[1]
The break-even: for a service business, the Quick Method wins until your GST/HST-bearing operating expenses reach roughly $25,000 a year. Above that, the regular method returns more.

What the Quick Method actually does

Most GST/HST registrants use the regular method: you add up the tax you collected from customers, subtract the input tax credits (ITCs) on the tax you paid to suppliers, and remit the difference. It is accurate, and it requires you to capture and categorise the tax on every single purchase you make all year.

The Quick Method replaces that subtraction with a flat rate. You continue to charge your customers the ordinary rate - a New Brunswick contractor still charges 15% HST, an Alberta shop still charges 5% GST. Nothing about your invoices changes. What changes is the remittance: instead of "tax collected minus ITCs," you remit a fixed percentage of your total sales including the tax you charged.[1]

The flat rate is set below the rate you collect. That spread is deliberate. It is the government's estimate of the ITCs an average business of your type would have claimed, handed to you as a fixed allowance rather than a calculation. If your real expenses are lower than the average the rate assumes, you come out ahead and keep the difference as income.

This is not a loophole and it is not aggressive planning. It is a statutory election under the Excise Tax Act, administered through the Streamlined Accounting (GST/HST) Regulations, and CRA publishes the rate tables itself.[4][5]

Whether you are allowed to use it

Two tests: a size test and a business-type test. Both have to pass.

The size test. Your revenues from annual worldwide taxable supplies, including zero-rated supplies, including the GST/HST itself, and including the supplies of your associates, must not exceed $400,000. You measure this over either the first four or the last four consecutive fiscal quarters out of your last five - you only need one of those windows to pass. Revenue from financial services, and sales of real property, capital assets and goodwill from the sale of a business, are excluded from the count.[1]

Note that the threshold is measured on tax-included revenue. A New Brunswick service business billing $348,000 before tax is already at $400,200 including HST, and is over the line.

The business-type test. CRA lists the businesses that cannot elect, and the list catches a lot of professional service firms:[1]

persons providing bookkeeping, financial consulting, tax consulting or tax return preparation services
persons providing legal, accounting or actuarial services in the course of their professional practice
listed financial institutions
charities and public institutions
non-profit organizations with at least 40% government funding in the year
municipalities and designated local authorities
non-profit public colleges, school authorities and universities
hospital authorities, facility operators and external suppliers

You also need a permanent establishment in Canada. Some of the excluded bodies have a separate route - the Special Quick Method for public service bodies - which is a different election with different rates.[1]

The remittance rates

There are two rate tables, and picking the wrong one is the most common way this election goes wrong. The first table is for businesses that purchase goods for resale - antique dealers, grocery and convenience stores, craft shops, boutiques, gas service stations. The second is for everyone else who qualifies, generally service businesses - auto repair shops, campgrounds, caterers, delivery services, dry cleaners, house-cleaning services, painting contractors, photographers, small manufacturers, taxi drivers and travel agencies.[1]

Within each table, the rate depends on two things at once: the province where your permanent establishment is located, and the rate at which the particular supply was taxed. Those are frequently not the same place, which is why the tables are grids rather than lists.

For a service business whose permanent establishment is in a 15% HST province - New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island - making supplies in that same province, the remittance rate is 10.0%. For a service business established in Ontario making Ontario supplies at 13%, it is 8.8%. For a service business in a GST-only province such as Alberta making 5% supplies, it is 3.6%.[1]

For a goods-for-resale business, the rates are materially lower, because such a business is assumed to be recovering large ITCs on inventory. Established in a 15% province supplying at 15%, the rate is 5.0%. Established in Ontario supplying at 13%, 4.4%. Established in a GST-only province supplying at 5%, 1.8%.[1]

If you supply into both participating and non-participating provinces you may need more than one rate, unless 90% or more of your eligible supplies in the reporting period fall on one side, in which case you use the single corresponding rate.[1] Always read the rate off CRA's current tables rather than from memory or from a blog post - including this one. The rates have moved with provincial HST changes before and will again.

The 1% credit almost everyone forgets

On top of the flat rate, you are entitled to a credit of 1% on the first $30,000 of revenue from your eligible supplies, including the GST/HST, in each fiscal year. To qualify, your election has to be in effect at the beginning of the fiscal year, or on the day you became a registrant if you are a new registrant.[1]

It is worth up to $300 a year, it does not carry forward if you do not use it, and it is claimed on line 107 when filing through GST/HST NETFILE. Businesses that self-file miss it constantly, because nothing in the return prompts you for it.[1]

A worked example

A painting contractor in Moncton, New Brunswick. Permanent establishment in New Brunswick, all work performed in New Brunswick, $100,000 of sales in the fiscal year before tax.

Under the Quick Method: the contractor charges 15% HST, so collects $15,000 and has $115,000 of tax-included revenue. The service rate for a New Brunswick establishment making New Brunswick supplies is 10.0%, so the remittance is 10.0% of $115,000 = $11,500. Subtract the 1% credit on the first $30,000, which is $300. Net tax remitted: $11,200.

Under the regular method: the contractor remits $15,000 less ITCs. To beat $11,200, the ITCs would have to exceed $3,800 - which means more than $25,333 of HST-bearing operating expenses in the year, since $3,800 divided by 0.15 is $25,333.

Run the same exercise for an Ontario service business at the 8.8% rate and the break-even lands at about $25,800 of taxable operating spend. The arithmetic differs by province but the answer is remarkably stable: a service business with under roughly $25,000 a year of GST/HST-bearing operating expenses is usually better off on the Quick Method.

One important adjustment to that rule. Capital purchases are not part of the break-even, because the Quick Method does not take those ITCs away from you. You may still claim input tax credits on purchases of capital assets other than real property - computers, vehicles, equipment - and on improvements to them.[1] A consultant who buys a $4,000 laptop still claims that tax back. So do not count capital spending when deciding.

How and when to elect

You elect by filing Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting.[2] The deadline depends on your filing frequency:

Annual filers: by the first day of your second fiscal quarter.[1]
Monthly and quarterly filers: by the due date of the return for the reporting period in which you begin using the Quick Method.[1]
New registrants filing a first return for a period that is not a full fiscal year: by the due date of that return.[1]

The effective date you give CRA has to be the first day of a reporting period. The election then stays in effect until you exceed the $400,000 threshold, become an ineligible type of business, or revoke it - and a revocation has to be filed by the due date of the return for the last period you want the method to apply to.[1]

If you cross the threshold, you stop. CRA's own example is a clothing store whose 2024 tax-included sales exceeded $400,000; it had to stop at the end of the first fiscal quarter of 2025 and revert to the regular method from April 1.[1]

Where this goes wrong

Charging the flat rate to customers. The single most damaging error. The Quick Method changes what you remit, not what you charge. A New Brunswick business on the 10.0% rate still invoices 15% HST. Billing customers 10% is under-collecting tax you are still liable for.

Applying the rate to pre-tax sales. The rate applies to revenue including the GST/HST. Applying 10.0% to $100,000 instead of $115,000 under-remits by $1,500 a year, every year, and compounds until someone reconciles it.

Using the goods rate while running a service business. The goods-for-resale rates are roughly half the service rates. A service business that files at 5.0% instead of 10.0% has a serious shortfall accruing.

Still claiming operating ITCs. Once you elect, the ITCs on rent, software, fuel, phone and supplies are gone. Claiming both the flat rate and those credits is double-dipping and will not survive review.

Electing without checking the exclusion list. Bookkeeping and tax preparation businesses are barred by name, and they are exactly the sort of low-overhead service business that would otherwise benefit most.[1]

Forgetting to re-test each year. Growth is the thing that ends this election, and it ends it retroactively to a quarter boundary. If you are anywhere near $400,000 tax-included, check the quarterly windows before you file, not after.

The bottom line

The Quick Method is best understood as a trade: you give up the deduction for tax on your operating expenses, and in exchange you get a lower remittance rate and a great deal less bookkeeping. For a low-overhead service business - a contractor, a photographer, a cleaner, a delivery operator - that trade is usually favourable and often worth a few thousand dollars a year.

For a business with heavy taxable overhead, significant rent, or large inventory purchases, the regular method almost always wins. Run the break-even on last year's actual numbers before you elect, exclude your capital purchases from that calculation, and re-run it whenever your cost structure moves.

Frequently asked questions

Do I still charge my customers the normal GST/HST rate under the Quick Method?

Yes. The Quick Method only changes what you remit to CRA, not what you invoice. A business in a 15% HST province still charges 15% HST on its invoices even though it may remit at a 10.0% flat rate. Charging customers the remittance rate instead of the statutory rate means under-collecting tax you remain liable for.

What is the revenue limit for the Quick Method?

Your worldwide taxable supplies, including zero-rated supplies, including the GST/HST itself, and including those of your associates, must not exceed $400,000 over either the first four or the last four consecutive fiscal quarters of your last five. Because the threshold includes tax, a New Brunswick business billing about $348,000 before HST is already at the limit.

Can I still claim input tax credits if I use the Quick Method?

Only on capital purchases. You give up input tax credits on operating expenses such as rent, fuel, software and supplies, but you may still claim them on purchases of capital assets other than real property - computers, vehicles and equipment - and on improvements to those assets.

Which businesses cannot use the Quick Method?

CRA bars persons providing bookkeeping, financial consulting, tax consulting or tax return preparation services, and persons providing legal, accounting or actuarial services in their professional practice. Also excluded are listed financial institutions, charities, public institutions, non-profits with at least 40% government funding, municipalities, non-profit public colleges, school authorities, universities, hospital authorities, facility operators and external suppliers.

How do I know whether the Quick Method saves me money?

Calculate your flat remittance on tax-included revenue, subtract the 1% credit on the first $30,000, and compare it to the tax you collected less your operating-expense input tax credits. For a service business the break-even sits at roughly $25,000 of GST/HST-bearing operating expenses per year. Exclude capital purchases from the comparison, since those input tax credits survive the election.

How do I elect to use the Quick Method?

File Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting. 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 reporting period in which they begin using the method. The effective date must be the first day of a reporting period.

Sources cited in this article

CRA - RC4058, Quick Method of Accounting for GST/HST
Primary source for eligibility, the $400,000 threshold, the exclusion list, both remittance rate tables, the 1% credit and the election deadlines.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4058/quick-method-accounting-gst-hst.html
CRA - Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting
The form used to make or revoke the election.
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/gst74.html
CRA - RC4022, General Information for GST/HST Registrants
Background on the regular method, input tax credits and registrant obligations.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html
Streamlined Accounting (GST/HST) Regulations, SOR/91-51
The regulations that create and govern the Quick Method election.
https://laws-lois.justice.gc.ca/eng/regulations/SOR-91-51/index.html
Excise Tax Act, R.S.C. 1985, c. E-15
The governing statute for GST/HST.
https://laws-lois.justice.gc.ca/eng/acts/E-15/
CRA - Charge and collect the tax: which rate to charge
Current GST and HST rates by province, used to determine which rate you charge customers.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate.html
CRA - Complete and file a GST/HST return
Filing mechanics, including where the 1% credit is reported.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/complete-file-return.html

All sources verified 2026-08-12. Spotted a link that has moved? Email support@mapleexpense.com and we will correct it.