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GST/HST

Should you elect the GST/HST quick method?

Elect it if your GST/HST-bearing costs run under about 20% of your fees and almost none of your sales are zero-rated. What it retains, and what it costs.

By Matthew Reeves, FounderAugust 9, 2026 · 8 min read
Show figures for

Quebec runs its own corporate tax regime through Revenu Québec, and Cadence doesn't currently serve Quebec. The figures below are Ontario's.

We haven't verified this guide's figures for New Brunswick yet. The figures below are Ontario's.

We haven't verified this guide's figures for Nova Scotia yet. The figures below are Ontario's.

We haven't verified this guide's figures for Prince Edward Island yet. The figures below are Ontario's.

We haven't verified this guide's figures for Newfoundland and Labrador yet. The figures below are Ontario's.

Summary

If your corporation is registered for GST/HST, meaning it charges sales tax on its invoices and files returns for it, the quick method is an optional shortcut for working out how much of that tax you send the Canada Revenue Agency (the CRA, the federal department that collects tax). Electing it, the CRA’s term for filing a short form to say you’ve switched, changes nothing a customer can see. You still charge 5% GST, the federal Goods and Services Tax, or the combined HST (Harmonized Sales Tax) rate of the province where the sale is made, so a local sale bears 13% HST in Ontario5% GST in British Columbia5% GST in Alberta5% GST in Saskatchewan5% GST in Manitoba15% HST in New Brunswick14% HST in Nova Scotia15% HST in Prince Edward Island15% HST in Newfoundland and Labrador. Which rate applies follows where your client is, not where you are.1 You file the same return, monthly, quarterly or yearly, and only the arithmetic on it changes.

Under the default rules, called the regular method, you send in the tax you charged customers minus the tax you paid your own suppliers, and claiming back that second amount is an input tax credit. Under the quick method you send in a flat percentage of your tax-included sales instead (i.e. your fees with the GST/HST you charged added in), and you give up input tax credits on everything except equipment, vehicles and buildings.

In our view an incorporated owner running a service business should elect, and the work is one online form, if all four hold:

  1. Your line of work isn’t one the rules shut out, as they do legal, accounting and actuarial practice, bookkeeping, tax return preparation, tax consulting and financial consulting.2
  2. Your sales with the tax you charged included, added to those of any associated company, come to $400,000 or less across four of your fiscal quarters.3
  3. Almost none of your sales are zero-rated, meaning taxable at a rate of 0%, which for most owners means work billed to clients outside Canada. You charge no tax on those, so the quick method leaves you nothing to keep and takes your Canadian credits anyway.4
  4. Your Canadian costs that carry GST/HST, at their price before tax, come to under about 20% of the fees you bill before tax (e.g. under $40,000 of such costs on $200,000 of fees).5

The first two are legal eligibility tests, and two more (how long you’ve been in business, and where your place of business sits) are below. The last two decide whether electing pays, and the third flips the answer most often. Our quick method calculator runs both methods on your own sales and costs and finds the break-even for you.

An Ontario consultant billing $200,000 of fees retains roughly $6,400 of the HST collected, and gains that minus the credits given up: about $5,100 if $10,000 of costs carry HST, about $1,200 if $40,000 do.5

A consultant in Alberta, British Columbia, Manitoba or Saskatchewan billing $200,000 of fees in 2026 retains roughly $2,700 of the GST collected, before subtracting the credits given up.5

Who can elect

All four conditions below are legal tests, separate from whether electing pays.

First, your trade. If your business sells legal, accounting or actuarial work (actuaries price risk for insurers and pension plans) as a professional practice, you’re shut out, and so is anyone selling bookkeeping, tax return preparation, tax consulting or financial consulting.2 What the company sells matters, not what you’re qualified in, so an accountant whose corporation runs a bakery is fine. Financial consulting isn’t defined anywhere, so advising clients on their money, their financing or their financial structure is likely caught, while writing software, running marketing or doing trade work isn’t. Ask the CRA for a written ruling before electing if you’re near that line.

Second, size. Your worldwide taxable sales with the GST/HST included, plus those of any associated company (i.e. most often a second corporation you or your family also control), must not exceed $400,000.3 Taxable sales means everything you billed anywhere in the world for work GST/HST applies to, including work taxed at 0% for clients abroad, plus the tax you charged. You measure across four of your own fiscal quarters, and you pick the window: the last four of your last five, or the first four.

In Ontario the 13% HST you charged counts toward the $400,000 as well as your fees, so you reach the ceiling at a lower level of fees before tax than a business in a GST-only province does, a figure not stated here.

In Alberta, British Columbia, Manitoba and Saskatchewan only the 5% GST rides on your fees, so the same $400,000 is reached at a higher level of fees before tax, a figure not stated here.

Third, time. You need to have been engaged in commercial activities throughout the 365 days before the reporting period your election starts in.6 A younger corporation can still elect if it’s reasonable to expect it will qualify once it has been going that long.6

Fourth, a permanent establishment in Canada, meaning a fixed place of business (e.g. an office, a workshop or the room at home you work from). The province it sits in picks which column of remittance rates you use, not what you charge customers.

The rate, and the arithmetic behind it

You take your sales for the reporting period you’re filing, tax already added in, multiply by a remittance rate (i.e. a flat percentage set in federal regulation), and send the result to the CRA.7 Rates come in two sets. The lower goods-for-resale set applies only if what you spent last fiscal year on goods to resell, tax included, was at least 40% of last year’s sales, tax included, which is the 40% resale test.8 Nearly every consultant, agency and trades business fails it, so the services rates follow.

A service business established in Ontario remits 8.8% of its tax-included Ontario sales and 1.8% of tax-included sales to customers in a province charging GST only (Alberta, British Columbia, Manitoba, Saskatchewan and the territories).9

A service business established in Alberta, British Columbia, Manitoba or Saskatchewan remits 3.6% of its tax-included GST-only sales for 2026, and 10.5% on sales into Ontario.9 British Columbia, Saskatchewan and Manitoba also run a separate provincial sales tax, which this election doesn’t touch, and Alberta has none.

The Atlantic provinces have their own columns, so ask us if you’re established there. Quebec runs its own provincial sales tax alongside the GST, and we don’t cover it.

On $100,000 of Ontario fees you charge $13,000 of HST and invoice $113,000. You remit 8.8% of $113,000, which is $9,944, and keep $3,056, plus 1% of your first $30,000 of tax-included sales each fiscal year, worth at most $300.10 The $3,056 is exactly what you’d have recovered as input tax credits on $23,508 of purchases before tax at 13%. Before that annual credit, the quick method breaks even when GST/HST-bearing operating costs reach about 23.5% of your fees before tax. The credit raises the actual break-even for an eligible business.5

On $100,000 of fees in Alberta, British Columbia, Manitoba or Saskatchewan you charge $5,000 of GST at 2026 rates and invoice $105,000. You remit 3.6% of $105,000, which is $3,780, and keep $1,220, plus 1% of your first $30,000 of tax-included sales each fiscal year, worth at most $300.10 The $1,220 is exactly what you’d have recovered as input tax credits on $24,400 of purchases before tax at 5%. Before that annual credit, the quick method breaks even when GST/HST-bearing operating costs reach about 24.4% of your fees before tax. The credit raises the actual break-even for an eligible business.5

We recommend electing below 20% of fees rather than running it to the break-even, because the election locks you in for a year and cost mixes move. The 20% is our judgment rather than a rule, and going closer to the line is defensible if your costs are stable.

What you give up

Zero-rated sales come first, since they’re what flips the answer. A zero-rated sale is taxable at a rate of 0%, covering exports, basic groceries, international freight and many services billed to clients outside Canada, subject to a list of exclusions.4 They sit outside the quick method calculation, so you leave them out of the tax-included total you multiply by the remittance rate and report the tax actually charged on them separately, which is nothing.

A consultant in Ontario billing $250,000 to clients in the United States, with $40,000 of Canadian costs before tax carrying HST, gives up about $5,200 a year of recoverable tax.5

A consultant in Alberta, British Columbia, Manitoba or Saskatchewan billing $250,000 to clients in the United States keeps nothing on those sales, and still gives up the credits for the 5% GST their Canadian costs carry.

Three smaller costs are worth naming. There’s no bad-debt relief, so a customer who never pays leaves you unable to recover tax you already sent in.11 The money you keep is income of your corporation, which pays income tax on it, though you also start deducting your operating costs at their tax-included price, so the tax lands on roughly the net gain.12 And you re-test the $400,000 ceiling and the 40% resale test yourself at every year-end, because the CRA won’t write to tell you you’ve outgrown the election.13

The most expensive error available here is a bookkeeping one. Software keeps flagging purchases as tax-recoverable after the election, nobody turns it off, and the return claims refunds you aren’t entitled to until a CRA audit disallows years of them.

Not everything goes. Credits survive on capital purchases (things bought to use in the business for years rather than to resell) and on land and buildings, so a coming equipment purchase isn’t a reason to stay on the regular method.14 Passenger vehicles are the exception, with the credit capped at the tax on a fixed ceiling rather than on the price you paid.15

Electing, and getting out

You elect online through My Business Account, the CRA’s portal for businesses, or on Form GST74.16 If you file once a year, the election takes effect on the first day of a fiscal year and you have until the first day of your second fiscal quarter to file the form, so April 1 for a December 31 year-end, covering the year that began the previous January 1. Monthly and quarterly filers have until the return for the first period covered is due, one month after that period ends. The CRA can accept a later date if you apply for one.16

Getting out takes a year: the election can’t be revoked until it has run twelve months, and once you revoke you wait another year to elect again.17 The operating-cost credits you gave up are gone, but credits on capital assets or real property that you were entitled to claim, and never claimed, survive the revocation.17

How often this changes

Re-run the decision at every fiscal year-end, and mid-year if any of the following happens. You start invoicing clients outside Canada, the change most likely to turn a good election bad. You move from doing the work yourself to subcontracting it, since subcontractors registered for GST/HST charge you tax the quick method makes unrecoverable. Your tax-included sales plus your associated companies’ cross $400,000, or you add a service line the rules shut out.

Closing thoughts

Sales tax is one of the few places in an owner-managed business where one form, filed once, changes the money for years without changing anything a client sees. What makes the quick method worth an hour isn’t the calculation, it’s that the inputs are already in last year’s file and almost nobody looks at them.

How we handle it

We run the break-even on your last completed year first: tax-included sales, associated companies, the share of your costs that carries GST/HST, and how much you bill outside Canada. If electing wins we file it, set the remittance rate in your bookkeeping file, and turn off the purchase tax codes that would otherwise generate bad claims. GST/HST returns and the annual re-test are in our Year-Round Tax Partner and Tax + Accounting packages, priced on our pricing page.

Footnotes

  1. The GST rate is 5%. HST is 13% in Ontario, 14% in Nova Scotia (down from 15% on April 1, 2025) and 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island. Which rate applies turns on the province in which the supply is made, determined by the place-of-supply rules, not on where the supplier is established. Source: CRA, “GST/HST calculator (and rates)” and “Charge and collect the GST/HST”, and Excise Tax Act ss.165(1) and 165(2) and Schedule IX. Verified 2026-08-09. More on which rate applies where: our e-commerce GST/HST guide. ↩

  2. Excluded from the quick method are persons providing bookkeeping, financial consulting, tax consulting or tax return preparation services in the course of a commercial activity. Also excluded are persons providing legal, accounting or actuarial services in the course of a professional practice. Barred as well are listed financial institutions, charities, public institutions and non-profits with at least 40% government funding. So are municipalities and designated local authorities, non-profit schools, colleges and universities, and hospital authorities, facility operators and external suppliers. Source: CRA guide RC4058, “Quick Method of Accounting for GST/HST”, section “Exceptions”. The bar is set in law by the Streamlined Accounting (GST/HST) Regulations, SOR/91-51, s.15(1), definition of “specified registrant”. Verified 2026-08-09. ↩ ↩2

  3. The ceiling is $400,000 of revenue from annual worldwide taxable supplies with GST/HST included, counting zero-rated supplies, and the test is met at $400,000 or less rather than below it. The same figure for associated persons is added to yours. The word “associated” is a defined concept that is both broader and narrower than ownership. The total is tested over either the first four or the last four of your last five fiscal quarters, and you qualify if either window comes in at or under the ceiling. Revenue from financial services and from sales of real property, capital assets and goodwill is left out of the count. The amount is not indexed and is unchanged in the consolidation current to 2026-06-17. Source: CRA guide RC4058, “Determine if you can make this election”, and the Streamlined Accounting (GST/HST) Regulations, SOR/91-51, ss.2(3), 15(3)(a) and 16(1)(b). Verified 2026-08-09. ↩ ↩2

  4. Supplies outside the quick method calculation are zero-rated supplies, supplies made outside Canada, certain supplies to Indians, and sales of real property. Also outside it are sales of capital assets, supplies made as an agent or auctioneer, taxable benefits to an employee or shareholder, and self-assessed personal appropriations and warranty reimbursements. You report the actual tax charged on these separately rather than applying the remittance rate to them. Services supplied to non-residents are zero-rated under Excise Tax Act Schedule VI, Part V, s.7, which carries a substantial list of exclusions that was not read directly for this article, hence the hedge in the body. Source: CRA guide RC4058, “Supplies not eligible for the quick method calculation”, and SOR/91-51, s.15(1), definition of “specified supply”. Verified 2026-08-09. ↩ ↩2

  5. Cadence’s own arithmetic, worked from the CRA remittance rate tables cited elsewhere in these notes. No issuer publishes a break-even figure. Ontario, per $100,000 of fees before tax: collect $13,000, remit 8.8% of $113,000 for $9,944, retain $3,056. Retaining $3,056 equals 13% of $23,508 of purchases before tax, which is 23.5% of fees before tax (equivalently 20.8% of tax-included sales). A GST-only province, per $100,000 of fees: collect $5,000, remit 3.6% of $105,000 for $3,780, retain $1,220. Retaining $1,220 equals 5% of $24,400 of purchases before tax, which is 24.4% of fees before tax (23.2% of tax-included sales). The 20% threshold we recommend is not a derived figure, only the break-even less a deliberate margin of 3.5 points in Ontario and 4.4 points in a GST-only province. On $200,000 of Ontario fees: collect $26,000, remit 8.8% of $226,000 for $19,888, retain $6,112, plus the $300 credit, so $6,412. At $40,000 of pre-tax costs carrying HST the credits given up are $5,200 and the net gain is about $1,200. At $10,000 they are $1,300 and the net gain is about $5,100. In a GST-only province on $200,000 of fees: collect $10,000, remit 3.6% of $210,000 for $7,560, retain $2,440 plus $300. Verified 2026-08-09. The percentage comparisons deliberately exclude the annual credit and are conservative approximations, now labelled in the body. Including a full $300 credit in the $100,000 examples raises the illustrative break-even to about 25.8% in Ontario and 30.4% in GST-only provinces. Arithmetic and the CRA RC4058 credit conditions rechecked 2026-09-25. These comparisons concern operating purchases whose input tax credits are surrendered, not capital purchases with retained credits. ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  6. You must have been engaged in commercial activities throughout the 365-day period ending immediately before the current reporting period, which is not the same test as carrying on business. You must also have made no revocation of a quick method or simplified input tax credit election in that period, and you must have a permanent establishment in Canada. Source: SOR/91-51, s.16(1)(c), and CRA guide RC4058, “Determine if you can make this election”. A registrant not engaged in commercial activities for the full 365 days may still elect where it is reasonable to expect it will be an eligible registrant at the beginning of its first fiscal year beginning at least 365 days after it began commercial activities: SOR/91-51, s.18(1), and RC4058, “New registrants”. Verified 2026-08-09. ↩ ↩2

  7. The ceiling, the exclusions and the rate tables are set by the Streamlined Accounting (GST/HST) Regulations, SOR/91-51, Part IV. The enabling provision is section 227 of the Excise Tax Act. The consolidation is current to 2026-06-17, and the most recent relevant amendment is SOR/2025-77, which implemented the Nova Scotia rate decrease. Verified 2026-08-09. ↩

  8. You use the goods-for-resale rates only if the GST/HST-included cost of goods purchased in the previous fiscal year for resale, or for use in goods you produce for sale, was at least 40% of your total tax-included revenue from taxable supplies for that year. Basic groceries come out of both sides of the test, which is why a restaurant lands in the services group. Source: CRA guide RC4058, “Remittance rates for businesses that purchase goods for resale”, and SOR/91-51, s.15(5)(a). Verified 2026-08-09. ↩

  9. Service-business remittance rates for 2026, listed by the province of your permanent establishment. Ontario: 8.8% on supplies made in Ontario, 1.8% on supplies made in a province charging GST only, 9.6% on supplies made in Nova Scotia and 10.4% on supplies made in New Brunswick, Newfoundland and Labrador or Prince Edward Island. A non-participating province, meaning Alberta, British Columbia, Manitoba, Saskatchewan or a territory: 3.6% on supplies made in a GST-only province, 10.5% on supplies made in Ontario, 11.3% in Nova Scotia and 12.0% in the 15% provinces. The regulation frames these columns by province of supply, so the mapping to a tax rate would change if a province changed its HST rate. Where substantially all of a period’s eligible sales fall on one side of the participating line, which the CRA reads as 90%, a single rate applies for that period. Source: CRA guide RC4058, “Remittance rates for businesses that provide services” and “Supplies in both participating and non-participating provinces”, and SOR/91-51, ss.15(5)(b) and 15(5.02). Verified 2026-08-09. ↩ ↩2

  10. The credit is 1% of the first $30,000 of tax-included revenue from eligible supplies in each fiscal year, a maximum of $300. NETFILE filers claim it on line 107, while TELEFILE filers include it in the line 108 calculation. You get it only where the election was in effect at the beginning of that fiscal year, or on the day a new registrant became a registrant. Any unused portion doesn’t carry forward. Source: CRA guide RC4058, “Credit of 1% on the first $30,000”, and SOR/91-51, s.17(1). Verified 2026-08-09. ↩ ↩2

  11. No net tax adjustment for bad debts is available under the quick method, except on supplies that were outside the quick method calculation to begin with. Source: CRA guide RC4058, section “Bad debts”. Verified 2026-08-09. ↩

  12. The sales tax you retain under the quick method is business income, treated as government assistance under paragraph 12(1)(x) of the Income Tax Act by way of subsection 248(16). Note that s.248(16) on its face deems amounts claimed as an input tax credit to be assistance, so this is the CRA’s administrative position rather than a plain reading of the text. The offsetting relief is that operating costs are deducted at their GST/HST-included price, which is why the income tax falls on roughly the net gain. Source: Income Tax Act ss.12(1)(x) and 248(16), and CRA views document 2021-0898151E5 of November 2, 2021. Verified 2026-08-09. No corporate line number, schedule or rate is stated here. ↩

  13. An annual filer that exceeds the ceiling switches to the regular method at the beginning of its next fiscal year. A monthly or quarterly filer whose election was in effect at the start of the year, and which exceeded $400,000 in the prior fiscal year, switches at the beginning of its second fiscal quarter. Further timing variants are set out in the CRA guide. Source: CRA guide RC4058, “Duration of this election”, and SOR/91-51, s.16(2). Verified 2026-08-09. ↩

  14. Input tax credits still claimable under the quick method are those on real property and improvements to it, and those on capital assets other than real property and improvements to them. Credits also survive on purchases where the tax became payable before the election took effect and the claim period hasn’t expired. Operating expense and inventory credits are surrendered, and records still have to be kept for six years from the end of the year they relate to. Source: CRA guide RC4058, “Claiming input tax credits” and “Books and records”. Verified 2026-08-09. ↩

  15. Capital property has to be acquired for use primarily, meaning more than 50%, in commercial activities before any input tax credit arises (Excise Tax Act s.199(2)). For a passenger vehicle acquired as capital property, the tax deemed payable for credit purposes is the lesser of the tax actually paid and the tax on the capital cost limit prescribed by Income Tax Regulations s.7307(1)(b) (Excise Tax Act s.201). Whether a given van is a passenger vehicle turns on Income Tax Act s.248(1), which looks at seating capacity and at use for transporting goods or equipment. No dollar figure is stated here: the regulation consolidation current to 2026-06-17 shows $38,000 for vehicles acquired after 2024, while our buy-vs-lease guide states $39,000 for 2026 acquisitions, and the two need reconciling. Verified 2026-08-09. ↩

  16. Elect online through My Business Account or Represent a Client, or on Form GST74, “Election and Revocation of an Election to Use the Quick Method of Accounting”. The effective date must be the first day of a reporting period. Annual filers elect by the first day of their second fiscal quarter, and monthly and quarterly filers by the due date of the return for the first reporting period the method applies to, which Excise Tax Act s.238(1)(b) sets at one month after the end of that period. Excise Tax Act s.227(2)(c) permits the Minister to accept a later day on application of the registrant, so the deadlines above are not absolute. Source: CRA guide RC4058, “Determine when you can make the election”, CRA Form GST74, and Excise Tax Act ss.227(2) and 238(1), current to 2026-06-17. Verified 2026-08-09. The April 1 anchoring for a December 31 year-end is our own arithmetic. ↩ ↩2

  17. A revocation can’t take effect earlier than one year after the election became effective (Excise Tax Act s.227(4.1)), and a registrant that has revoked can’t elect again for a further year, because SOR/91-51 s.16(1)(c) requires no revocation in the preceding 365 days. Revocation is filed by the due date of the return for the last reporting period the quick method is to apply to. Input tax credits the registrant was entitled to claim while the election was in effect but did not claim, which in practice means capital-asset and real-property credits, are prescribed input tax credits under SOR/91-51 s.22 and may be claimed in a return for a reporting period ending after the election ceases. Source: CRA guide RC4058, “How to revoke the election”, SOR/91-51 s.22, and Excise Tax Act ss.227(4.1) and 227(5). Verified 2026-08-09. ↩ ↩2

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