Quick Method in GST: Eligibility, GST Rate & Examples

The Quick Method of Accounting for GST/HST is a simplified accounting method that helps small businesses reduce paperwork. It eliminates the need to report the actual GST/HST paid or payable on most purchases. Instead, businesses can multiply their revenue by the rate that applies to their situation.

 Eligibility for Quick Method under GST:

• You have been in business continuously throughout the 365-day period ending immediately before your current reporting period.

• Your revenues (including those of associated businesses) are not more than $400,000 for the last four out of five fiscal quarters.

• The corporation is not on the list of ineligible businesses

• The quick method calculation applies to most of your supplies of property and services. However, certain supplies you make are not eligible for this calculation. If you make a supply that is not eligible, you do not use a remittance rate to calculate how much tax you have to remit.

Non-Eligibility for Quick Method under GST:

• Bookkeepers, financial and tax consultants, tax preparers, lawyers, accountants, actuaries, and financial institutions.

• Charities, public institutions, non-profit organizations with at least 40% government funding, municipalities, and public colleges.

What is GST Rate and Credit Limit under Quick Method of GST?

GST rate for Quick Method is 8.8 % in Ontario and no ITC can be claimed

Quick Method of Accounting for GST/HST does not have a credit limit feature.

However, using the Quick Method you can claim 1% Tax credit on the first $30000 of revenue from eligible supplies.  

Under Regular HST method you need to remit 13% to the Canada Revenue Agency (CRA)

GST Calculation Quick method Vs. Regular

Example 1:

Mr. A sold goods worth $ 100000 in a year HST rate is 13%. Total sales including HST would be $113000 ($ 100000 x 13% plus $ 100000) and total input tax credit on purchase and expenses is $5000.

Under Regular Method	Under Quick Method
Gst would be $ 13,000 ($ 100,000 x 13%) Less: Credit $ 5,000 ( on purchase & expense) GST Payable: $8,000	Gst would be $ 9,944 ($ 113,000 x 8.8%) Less: Credit $ 300 ($ 30,000*1%) GST Payable: $9,644

Example 2:

Mr. A sold goods worth $ 100,000 in a year HST rate is 13%. Total sales including HST would be $113,000 ($ 100,000 x 13% plus $ 100,000) and there is no eligible input Tax Credit.

Under Regular Method	Under Quick Method
Gst would be $ 13,000 ($ 100,000 x 13%) Less: Credit $ 0 GST Payable: $13,000	Gst would be $ 9,944 ($ 113,000 x 8.8%) Less: Credit $ 300 ($ 30,000 x 1%) GST Payable: $9,644

Opt-in and out between HST Quick Method and regular method

Once you switch to the HST Quick method, you can continue using it until your annual income exceeds $400,000 or your business no longer meets the eligibility criteria.

However, if you want to switch from the Quick Method to the Regular Method, you have to wait for at least one year. Your HST election is valid for at least one year, so you must use the Quick Method before switching to the regular one.

If you want to switch back to the Quick Method after using the regular Method, you’ll need to make a new election with the CRA. You can use Form GST74, which is the same form used for the initial election, to make this new election.

It is advisable to seek advice from a tax expert before changing from the HST Quick Method to the regular Method or vice versa. We can assist you in comprehending the consequences and obligations of each Method, so that you can choose the most suitable one for your business.