What is the HST quick method and should my small Ontario business use it?
The quick method is a simplified HST accounting option available to most small businesses with annual taxable revenues (including HST) of $400,000 or less, with some exclusions (lawyers, accountants, and financial services businesses cannot use it). Instead of tracking every ITC individually, you remit a flat percentage of your HST-included revenues to the CRA.
In Ontario, the quick method rates are set by the CRA and vary depending on whether you are a service business or a goods business. The idea is that the reduced rate is meant to approximate your normal net tax after ITCs, without all the bookkeeping. You are still entitled to claim 100% ITCs on capital property purchases under the quick method.
Whether the quick method saves money depends on your actual ITC profile. Businesses with high input costs and many ITC-eligible purchases often do better using the regular method and claiming full ITCs. Service businesses with low input costs — a consultant who mainly sells their time — often benefit from the quick method because their actual ITCs are small. Comparing both calculations in your first year is worthwhile.
Key takeaways
- Quick method allows eligible small businesses to remit a flat percentage of revenues instead of tracking all ITCs.
- Available to businesses with taxable revenues up to $400,000; some professional services are excluded.
- Capital property ITCs are still claimable under the quick method.
- Run the math both ways — the quick method is not always better.