Quick Method
The Quick Method is an election that lets an eligible small business remit a reduced flat percentage of its tax-included sales instead of tracking input tax credits on every purchase.
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Key facts
| Category | GST, QST & HST |
|---|---|
| Also known as | Quick Method of accounting, quick method election |
| What it does | Remit a reduced rate on tax-included sales instead of tracking input tax credits |
| Eligibility | Annual taxable supplies under the prescribed limit; some sectors excluded |
| Election | Filed with the CRA; QST has a parallel election |
| Still claimable | Input tax credits on capital purchases such as equipment |
| Authority | Canada Revenue Agency; Revenu Québec |
What it means in practice
Eligibility is capped at $400,000 in annual taxable supplies including GST/HST. Under the election the business still charges tax at the normal rate, but remits a lower prescribed rate that varies by province and by whether the business supplies goods or services. Québec offers an equivalent election for QST. The election generally benefits businesses whose taxable purchases are small relative to sales — consultants, professionals and service trades with little material cost — because they collect far more tax than they pay out. It generally costs money for retailers, restaurants and anyone carrying inventory or buying significant equipment, since those businesses give up input tax credits worth more than the rate reduction. The Quick Method is not permanent and can be revoked, but it is not a decision to make on instinct: the right answer depends on the ratio of taxable inputs to taxable sales in a specific business, which is worth calculating before electing.
It suits low-input businesses, and only those
You continue to charge tax normally. The difference is on remittance: instead of tax collected less input tax credits, you remit a lower prescribed rate applied to tax-included revenue, and you stop tracking credits on operating expenses. That arithmetic favours a business whose costs are mostly labour or wages — a consultant, a designer, many professional services. It works against a business with substantial taxable purchases, because the credits given up exceed the rate reduction. Certain sectors are excluded outright, including accountants, lawyers and other listed professions. Capital purchases remain claimable separately, so a large equipment purchase does not have to be forgone.
FAQ
How do I know if the Quick Method saves me money?
Can I switch back?
Need this applied to your situation?
A definition only gets you so far. Talk to a Montréal CPA about what this means for your return — in English or French.