The Quick Method is a simplified way for eligible small businesses to calculate and remit GST/HST. It reduces paperwork by eliminating the need to track and report the exact GST/HST paid on most purchases.

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How It Works

1. 1. Charge GST/HST Normally
      Charge the applicable GST rate (5%) or HST rate on your taxable supplies.
   2. Simplified Remittance
      Calculate the GST/HST to remit by multiplying your total revenue (including GST/HST) by a predetermined remittance rate. This rate is less than the tax you collect, as it accounts for input tax credits (ITCs) you would have otherwise claimed.

Keep Records
Although you don’t need to report ITCs for most purchases, you must maintain detailed.

 

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Checklist: Does the Quick Method Apply to Your Business?

Use this checklist to see if your business qualifies:

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

• • You did not revoke an election of the Quick Method or the simplified method for claiming ITCs during the last 365-day period.

• • Your annual revenues (including GST/HST) from worldwide taxable supplies (including zero-rated supplies), and those of your associates, are not more than $400,000 in the previous fiscal year.

If you meet all the above conditions and are not an excluded business type (see below), you can use the Quick Method.

 

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Who Cannot Use This Method?

The Quick Method is unavailable to:

• • Professionals offering legal, accounting, financial, or tax services.

• • Charities, non-profits with significant government funding, and public institutions.

• • Listed financial institutions.

• • Municipalities, universities, schools, and hospitals.

 

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Advantages

• • Simplicity: Less paperwork and fewer calculations.

• • Cost Savings: You keep a portion of the tax collected, which may result in savings.

• • 1% Credit: A 1% credit applies to the first $30,000 of revenue from eligible supplies annually.

 

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Disadvantages

• • No ITCs on Most Purchases: You cannot claim ITCs for GST/HST paid on most business expenses.

• • Limited Eligibility: Excludes certain business types and high-revenue companies.

• • Ineligibility for Specific Supplies: Some supplies (e.g., real estate or zero-rated goods) require regular GST/HST accounting.

 

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When to Elect

• • Annual Filers: Elect by the first day of the second fiscal quarter.

• • Monthly/Quarterly Filers: Elect by the due date of the return for the period you start using the method.

The election takes effect on the first day of a GST/HST reporting period.

 

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Quick Method Remittance Rates

• • Service-Based Businesses (Alberta): 3.6%.

For example, if your service-based business earns $378,000 in revenue with eligible expenses of $170,000, using the 3.6% rate could save approximately $2,192 compared to the regular method.

 

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Revoking the Election

You can revoke your election after one year by the due date of your final GST/HST return under the Quick Method. Once revoked, you must wait at least one year to re-elect.

 

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Example: Prairie Bliss Spa

Business Overview:
Prairie Bliss Spa is a small beauty and wellness spa in Calgary, Alberta, offering massage therapy, facials, and other personal care services. The spa has been in operation for three years and files quarterly GST returns. It is evaluating the Quick Method to simplify GST reporting and reduce costs.

 

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Eligibility Check:

• • Annual Revenue: Prairie Bliss Spa’s taxable supplies (including GST) for the last four fiscal quarters ending December 31, 2024, totaled $370,000, below the $400,000 threshold.

• • Continuous Operations: The business has been in operation for more than 365 days.

• • No Revoked Elections: The spa has not previously revoked a Quick Method or simplified ITC election.

• • Business Type: Prairie Bliss Spa is not an excluded business type (e.g., legal, accounting, financial services).

The spa qualifies to use the Quick Method starting January 1, 2025.

 

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Calculating GST Using the Quick Method

• • Revenue (including GST): $370,000

• • GST Rate (Alberta): 5%

• • Quick Method Remittance Rate for Service-Based Businesses (Alberta): 3.6%

• • 1% Credit on First $30,000 of Revenue: Applicable

1. 1. Step 1: Apply the Remittance Rate to Revenue$370,000 x 3.6% = $13,320
      This is the amount of GST Prairie Bliss Spa will remit before applying the 1% credit.
   2. Step 2: Apply the 1% Credit$30,000 x 1% = $300Subtract this credit from the remittance amount
      $13,320 – $300 = $13,020
   3. Step 3: Compare to Regular MethodUnder the regular method, Prairie Bliss Spa would calculate GST as:370,000 x 5% = 18,500Subtract input tax credits (ITCs) on expenses:

• • Expenses (Including GST): $80,000

• • GST Paid on Expenses: $80,000 x (5/105) = $3,810

• • $18,500 – $3,810 = 14,690
    Using the regular method, the business would remit $14,690

Savings Using the Quick Method:
$14,690 – $13,020 = $1,670

 

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Summary

By switching to the Quick Method, Prairie Bliss Spa saves $1,670 annually in GST remittance and eliminates the need to track ITCs for most expenses. These savings reflect the Quick Method’s advantage for businesses with relatively low input costs and high revenue. Prairie Bliss Spa benefits from reduced administrative work and lower tax payments, allowing more focus on its operations and growth.

The Quick Method is an efficient tool for small businesses looking to simplify GST/HST reporting while potentially saving on costs.

The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Geib & Company to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.