Does my small business qualify for the Quick Method for HST?

Tuesday, October 1st, 2019

The Quick Method is a simplified way of calculating net tax for HST purposes. When you use the Quick Method, you still charge the GST at the rate of 5% or the HST at the applicable rate on your taxable supplies of service and products. However, this method allows you to calculate the tax that you remit by multiplying the revenue from your supplies (including GST/HST) for the reporting period by the Quick Method remittance rate, or rates that apply to your situation. This eliminates the need for tracking and totalling all the HST actually paid and allowed to be deducted from the HST collected.  This HST paid is also known as the “Input Tax Credits” (ITCs) which are subtracted from the HST collected.

This option is only available to your small business if it meets all of the following criteria:

1. Total annual revenues (including GST/ HST) of the business, and associated businesses, from worldwide taxable supplies does not exceed $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.
2. If you are an existing registrant, you must have been in business continuously throughout the last 365 days.
3. If you are a new registrant and you have not been in business continuously for the past year but you are an eligible type of business, you may be eligible to use the Quick Method. You can elect to use the Quick Method if, in your first full year of business, you can reasonably expect your revenues from worldwide taxable supplies, and those of your associates, to be $400,000 or less.
4. You have not revoked a previous election for the Quick Method within the last 365 days.
5. Your business is not found on CRA’s list of businesses/persons not eligible to use the Quick Method. (Click here to see CRA’s complete list of exceptions).

What to do if my business qualifies?

An election must be filed in order to use the Quick Method. An election can be done online through CRA’s “My Business Account” or by mailing a completed Form GST74, ‘Election and Revocation of an Election to Use the Quick Method of Accounting’.

If you are an annual filer, this election must be made by the first day of your second fiscal quarter. For instance, if you have a December 31^st year-end, you must file the election before April 1^st.

If you are a quarterly or monthly filer, you must file the election by the due date of the return for the period in which you have begun to use the Quick Method. For both monthly and quarterly filers, the due date is exactly one month after the reporting period end date. For instance, if the reporting period ended on March 31^st, the payment and filing deadline is April 30^th.

Should I elect to use the Quick Method?

While the Quick Method offers simplicity, it is always best to consider your business activities to ensure that electing to use the Quick Method is the best option for you and your small business.

Be sure to contact Ritchie Shortt & Tully LLP if you have any questions or would like our assistance!