The HST Quick Method: Could It Save You Money?
You bill $120,000 a year as a consultant in Ontario. You charge 13% HST on top, collect $15,600, and hand almost all of it to CRA every quarter, because your expenses are a laptop, a phone bill, some software and an accountant. Not much HST comes back to you as input tax credits.
There is a second way to calculate what you owe. It is called the Quick Method of accounting for GST/HST, and for a low-expense service business in Ontario it usually means you remit less. In the example above, about $2,400 less per year.
It is not free money and it does not suit everyone. Below is the rate, the eligibility rules, the arithmetic, and the one side effect that catches people out. If you are behind on filings rather than optimizing them, HST filing and cleanup is the place to start instead.
Bottom Line Up Front
- You remit a flat percentage of your HST-included revenue instead of tracking input tax credits. For an Ontario service business supplying Ontario clients that rate is 8.8% (CRA Guide RC4058, confirmed September 2026).
- You qualify if your worldwide taxable supplies, including the tax and including your associates, stay at or under $400,000. Accountants, bookkeepers, lawyers, tax preparers and actuaries are barred outright.
- You still get a 1% credit on your first $30,000 of eligible supplies each fiscal year, worth up to $300.
- No input tax credits on operating expenses, but you can still claim them on capital purchases such as equipment and vehicles.
- The HST you keep is taxable income and gets added to gross sales on the T2125 or your corporate return.
Contents
- What the Quick Method actually does
- Who can use it, and who is shut out
- The remittance rates for an Ontario business
- The 1% credit on your first $30,000
- What you give up and what you keep
- Worked example: an Ontario consultant, 2025
- Where the break-even sits
- The income tax side effect nobody mentions
- How to elect and how long you are stuck with it
- Common Questions
What the Quick Method actually does
You keep charging clients the normal rate. In Ontario that is 13% HST (CRA, rate in effect as of September 2026). Nothing about your invoices changes.
What changes is the calculation on your return. Instead of subtracting every input tax credit (ITC) you paid on purchases, you “multiply the revenue from your supplies (including the GST/HST) for the reporting period by the quick method remittance rate” (CRA, Guide RC4058, 2026). That rate is lower than the rate you charged, and the gap stands in for the ITCs you are no longer claiming.
The rate applies to the tax-included figure, not your pre-tax sales. That trips up more people than any other part of this. Bill $10,000 plus $1,300 HST and the base for the calculation is $11,300.
Not every dollar counts. Excluded from the calculation and handled separately are sales of real property, sales of capital assets, and supplies “on which the customer does not have to pay the tax, such as: zero-rated supplies, supplies made outside Canada, certain supplies to Indians” (CRA, Guide RC4058, using CRA’s own wording).
Start here: pull your last four HST returns and total the ITCs you actually claimed. That number is what you would be giving up.
Who can use it, and who is shut out
Two tests: a size test and a profession test.
The size test: your revenues “(including the GST/HST) from annual worldwide taxable supplies, (including zero-rated supplies) and those of your associates, are not more than $400,000 for either the period consisting of the first four consecutive fiscal quarters out of your last five fiscal quarters, or the period consisting of the last four fiscal quarters out of your last five fiscal quarters” (CRA, Guide RC4058). Revenue from financial services, and from sales of real property, capital assets and goodwill, comes out of that count.
Two things people miss: the $400,000 is measured including the tax you charged, and it picks up associated businesses. Two corporations you control are counted together.
The profession test is a flat ban. Per Guide RC4058, these cannot use the Quick Method at all:
| Barred from the Quick Method |
|---|
| Bookkeeping, financial consulting, tax consulting and tax return preparation services |
| Legal, accounting and actuarial services |
| Listed financial institutions |
| Charities and public institutions |
| Non-profit organizations with 40% or more government funding |
| Municipalities and local authorities |
| Public colleges, school authorities and non-profit universities |
| Hospital authorities, facility operators and external suppliers |
Read the second row again. Accountants and bookkeepers are on the list, so the firm writing this article is not permitted to use the Quick Method on its own HST returns.
IT consultants, management consultants, marketing people, trades, designers, engineers and most contractors are not on the list and are generally free to elect. If your work sits near a barred category, for example a consultant who also keeps clients’ books, get the classification checked before you elect rather than after.
Before anything else: total your last four quarters of tax-included revenue, add anything from associated companies, and confirm you are under $400,000.
The remittance rates for an Ontario business
Your rate depends on two things: where your permanent establishment sits, and where the supply is made. A business run out of North York has its permanent establishment in Ontario, which fixes the column of CRA’s tables you read. The province of your customer fixes the row.
For an Ontario service business billing an Ontario client, the rate is 8.8%. That is the number most of this article rests on.
Both tables below are for a business whose permanent establishment is in Ontario, from CRA’s Guide RC4058, confirmed September 2026.
Service providers, permanent establishment in Ontario
| Where the supply is made | Tax you charge | Remittance rate |
|---|---|---|
| Ontario | HST 13% | 8.8% |
| Nova Scotia | HST 14% | 9.6% |
| New Brunswick, Newfoundland and Labrador, Prince Edward Island | HST 15% | 10.4% |
| Alberta, BC, Manitoba, Saskatchewan, Quebec, the territories | GST 5% | 1.8% |
Businesses that buy goods for resale, permanent establishment in Ontario
| Where the supply is made | Tax you charge | Remittance rate |
|---|---|---|
| Ontario | HST 13% | 4.4% |
| Nova Scotia | HST 14% | 5.3% |
| New Brunswick, Newfoundland and Labrador, Prince Edward Island | HST 15% | 6.1% |
| Alberta, BC, Manitoba, Saskatchewan, Quebec, the territories | GST 5% | 0%, plus a 2.8% credit |
The resale rates are lower because those businesses carry real inventory cost. To use them, “the cost (including the GST/HST) of goods you purchased in your previous fiscal year for resale, or to use in goods you produce or manufacture for sale, must be at least 40% of your total revenue from annual taxable supplies” (CRA, Guide RC4058). A consultant will not meet that. A retailer might.
Bill clients in more than one province and you run more than one rate on the same return. An Ontario consultant with a Calgary client charges 5% GST on that work and remits 1.8% on it, while the Ontario work runs at 8.8%.
Split revenue by the province where the supply is made before you calculate anything. If your bookkeeping records do not tag sales by province, fix that first.
The 1% credit on your first $30,000
Every fiscal year you get a 1% credit on the first $30,000 of revenue from eligible supplies, tax included. That is worth a maximum of $300 per fiscal year (CRA, Guide RC4058, and CRA T2125 guidance, 2026).
The credit is claimed on line 107 of your GST/HST return if you file by NETFILE, and it does not carry forward. Quarterly filers apply it across reporting periods until the $30,000 of supplies is used up or the fiscal year ends, whichever comes first.
One condition attaches. Your “quick method election must be in effect at the beginning of a fiscal year, or if you are a new registrant, on the day you became a registrant” (CRA, Guide RC4058). Elect partway through an existing fiscal year and you wait until the next one.
If you are electing anyway, lining the election up with the start of your fiscal year is worth $300.
What you give up and what you keep
You give up input tax credits on most of what you buy. CRA is blunt: “you cannot claim ITCs on most of your purchases when you use the quick method” (CRA, Guide RC4058). Software, phone, internet, advertising, office supplies, professional fees, subcontractors who charge you HST. All of that HST stays with CRA.
You keep input tax credits on capital property. Per Guide RC4058, you may still claim ITCs for:
- purchases of real property and improvements to real property
- purchases of capital assets other than real property, “such as computers and vehicles, and improvements to such property”
- purchases where the GST/HST became payable before your election took effect, if the claim period has not expired
That capital exception matters more than it looks. A contractor who buys a $60,000 truck still claims the $7,800 of HST on it. So does a consultant who buys $8,000 of computers. The Quick Method costs you ITCs on running costs, not on asset purchases. Anyone reading up on write-offs for IT contractors is usually in exactly the low-cost, high-billing position this suits.
One sorting job: split last year’s purchases into operating costs and capital assets. Only the operating side is at risk.
Worked example: an Ontario consultant, 2025
This is an illustration, not a client. Figures are for a 2025 fiscal year using the rates above.
The facts. Priya is an independent management consultant with a permanent establishment in North York, registered for HST, filing quarterly. In her 2025 fiscal year she bills $120,000, all to Ontario clients, and charges 13% HST on top. Her HST-taxable operating costs are $12,000 before tax: software, phone, internet, advertising and professional fees. She buys no equipment that year.
| Item | Amount |
|---|---|
| Revenue before HST | $120,000.00 |
| HST collected at 13% | $15,600.00 |
| Revenue including HST | $135,600.00 |
| HST-taxable operating costs before tax | $12,000.00 |
| HST paid on those costs (13%) | $1,560.00 |
Regular method. HST collected minus ITCs:
$15,600.00 − $1,560.00 = $14,040.00 remitted
Quick Method. Tax-included revenue times 8.8%, minus the 1% credit on the first $30,000 of tax-included supplies:
$135,600.00 × 8.8% = $11,932.80 $11,932.80 − $300.00 = $11,632.80 remitted
The difference.
$14,040.00 − $11,632.80 = $2,407.20 kept
That $2,407.20 is the whole case for the Quick Method, and it is real. Read the income tax section before you spend it, because a slice goes back out as income tax.
Where the break-even sits
The Quick Method wins when your HST-bearing operating costs are low relative to revenue. Here is the flip point, worked rather than asserted.
Call pre-tax revenue R and HST-taxable operating costs E, all Ontario.
- Regular method remittance: 0.13R − 0.13E
- Quick Method remittance: 0.088 × 1.13R − $300, which is 0.09944R − $300
Set them equal and solve for E:
0.13E = 0.03056R + $300 E = 0.2351R + $2,308
Break-even sits at roughly 23.5% of revenue in HST-taxable operating costs, plus about $2,300 of headroom from the 1% credit. On $120,000 of revenue that is about $30,500 of taxable operating costs, or just over a quarter of revenue.
Same consultant, same $120,000, different expense levels:
| HST-taxable operating costs | As % of revenue | Regular method | Quick Method | Better by |
|---|---|---|---|---|
| $12,000 | 10% | $14,040.00 | $11,632.80 | Quick, $2,407.20 |
| $24,000 | 20% | $12,480.00 | $11,632.80 | Quick, $847.20 |
| $30,000 | 25% | $11,700.00 | $11,632.80 | Quick, $67.20 |
| $36,000 | 30% | $10,920.00 | $11,632.80 | Regular, $712.80 |
| $48,000 | 40% | $9,360.00 | $11,632.80 | Regular, $2,272.80 |
Two adjustments to that rule of thumb. Only costs that actually carry HST count, so wages, most insurance, bank charges and payments to unregistered suppliers do not push you over. A business with a big payroll can look expensive and still be a strong Quick Method candidate. And capital purchases sit outside this entirely, because you claim those ITCs either way.
The quick test: take last year’s total ITCs, strip out the capital ones, divide the rest by 0.13, and compare the result to 25% of your revenue. Above it, stay on the regular method.
The income tax side effect nobody mentions
The HST you keep under the Quick Method is income, and CRA expects to see it.
On Form T2125 the arithmetic is explicit. Amount 3D is the GST/HST collected on Quick Method sales, amount 3E is your remittance, “the subtotal at amount 3F is amount 3D minus amount 3E”, and “Amount 3G (Adjusted gross sales) is the total of amount 3C plus amount 3F” (CRA, 2026). The gap between collected and remitted lands in gross sales on line 8000. The 1% credit goes to line 8230, other income.
Run it for Priya:
| Income tax effect | Amount |
|---|---|
| HST collected (amount 3D) | $15,600.00 |
| Quick Method remittance (amount 3E) | $11,932.80 |
| Added to gross sales (amount 3F) | $3,667.20 |
| 1% credit to other income | $300.00 |
| Extra income reported | $3,967.20 |
| Extra expense deduction, because operating costs are now claimed HST-included | $1,560.00 |
| Net increase in taxable income | $2,407.20 |
The net increase in her taxable income is exactly the HST she saved. That is the design, not a penalty: you keep $2,407.20 of HST and you pay income tax on $2,407.20 at your marginal rate. Whatever is left is yours.
Where it goes wrong is when nobody makes the entry. The saving shows up in the bank account, the income adjustment never reaches the T1 return, and income is understated year after year until CRA reviews it.
Tell whoever prepares your income tax return that you are on the Quick Method, in writing, before they start.
Not sure which method wins on your actual numbers? It is a twenty-minute calculation with last year’s return in front of you, and it costs real money in both directions if it is wrong. Ruby Tax has handled HST and corporate filings from North York for over ten years, and you talk to the person doing the work. Get a free quote or call 647-990-7258.
How to elect and how long you are stuck with it
You elect through My Business Account, through Represent a Client if your accountant files for you, or by filing Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting (CRA, 2026). The deadlines, per Guide RC4058:
| Your filing frequency | Election deadline |
|---|---|
| Annual | The first day of your second fiscal quarter |
| Monthly or quarterly | The due date of the return for the reporting period in which you begin using the Quick Method |
| New registrant whose first return is not a full year | The due date of that return |
The election is not a year-by-year choice. You “can revoke the election only after your quick method election has been in effect for at least one year”, and once you revoke, “you have to wait at least one year before you can elect to use the quick method again” (CRA, Guide RC4058). Treat it as a commitment of at least a full year, and think about whether a change in your cost structure is coming.
The election also ends on its own if you stop qualifying, either by crossing $400,000 or by moving into a barred category.
Check the calendar: your fiscal year-end and filing frequency, then work backwards to the election date that also captures the $300 credit.
Common Questions
Does the Quick Method change what I charge my clients?
No. You charge the same 13% HST in Ontario and your invoices look identical. Only the calculation on your return changes. Your clients claim their own ITCs on the full HST you charged them, exactly as before.
What if I already filed this year’s returns the regular way?
The deadlines above are per reporting period, so for a quarterly filer the earliest start is generally the next period whose return is not yet due. Periods already filed under the regular method stay as filed. If those filings are also late, the interest and penalty side needs sorting first, and late HST returns are a separate problem from this one.
I have a corporation. Does anything change?
The Quick Method rules are identical for a corporation, since they are GST/HST rules rather than income tax rules. The difference is where the income adjustment lands. Instead of the T2125 lines above, the retained HST flows into revenue in your financial statements and onto the corporate return.
Do I still need to keep receipts?
Yes. You need them for your income tax deductions, for capital purchases where you are still claiming ITCs, and if CRA reviews whether you qualified at all. The Quick Method reduces ITC tracking on operating costs, not your recordkeeping obligations.
What to do next
Pull last year’s HST returns and income statement. Total the ITCs you claimed, remove the capital purchases, divide the rest by 0.13, and compare that to a quarter of your revenue. If you are comfortably below it and not in a barred profession, the Quick Method is probably leaving money on your side of the table.
Then check the calendar. The $300 credit only works if the election is in place at the start of a fiscal year, and the election locks you in for a year once made. If the numbers are close, or your revenue spans several provinces, have someone run both calculations side by side before you file Form GST74. Getting it right once pays off every quarter after that.
About the author
Raj is the principal of Ruby Tax, a CRA e-file certified tax and accounting practice at 250 Consumers Road in North York. He has spent over ten years preparing personal and corporate returns for clients across Canada, from first-time filers to incorporated businesses and franchise operators. Much of that work is HST registration, filing and cleanup for owner-operated service businesses across the GTA.
Published: 25 September 2026. Last updated: 25 September 2026.
This article is general information, not tax advice for your situation. Tax rules change and the right answer depends on your facts. Confirm anything here against current CRA guidance or talk to us before you act on it.
