- Under the regular method, you calculate net tax the way most people assume HST works: you total the HST you collected from customers, subtract the HST you paid on eligible business…
- Under the Quick Method, you still charge customers the full applicable rate of HST on your invoices.
Every HST-registered business has to calculate its "net tax" — the amount it owes CRA or is owed back — for each reporting period. Most businesses do this the standard way, tracking HST collected and HST paid on every purchase. But eligible small businesses have a second option: the Quick Method, a simplified calculation that trades detailed input tax credit tracking for a flat, prescribed remittance formula.
Neither method is automatically better. The right choice depends on your business's expense profile, and the only way to know for sure is to run the numbers both ways. This guide explains how each method works and what factors actually drive the decision.
The Regular Method: Track Every Input Tax Credit
Under the regular method, you calculate net tax the way most people assume HST works: you total the HST you collected from customers, subtract the HST you paid on eligible business purchases (your input tax credits, or ITCs), and remit or claim the difference. This method rewards businesses with significant deductible business expenses — the more HST you've genuinely paid on inputs, the more you can offset against what you collected.
The tradeoff is administrative: you need organized records supporting every input tax credit you claim, since CRA can ask you to substantiate them on review.
The Quick Method: A Simplified Remittance Calculation
Under the Quick Method, you still charge customers the full applicable rate of HST on your invoices. But instead of tracking input tax credits on every individual purchase, you apply a prescribed percentage — set by CRA and varying by the nature of your business and your province — to your total revenue (including the tax you collected), and remit that calculated amount instead of the line-by-line difference. In exchange for the simplicity, you generally give up claiming input tax credits on most day-to-day operating expenses, though certain capital purchases remain eligible for credits under specific rules.
Because the applicable percentage is set by CRA and can differ by business type, don't assume a number from a general article or an old return applies to your situation — confirm the current prescribed rate for your specific business category before using this method.
Side-by-Side Comparison
| Factor | Regular Method | Quick Method |
|---|---|---|
| How net tax is calculated | HST collected minus actual input tax credits | Prescribed percentage applied to total revenue |
| Recordkeeping for ITCs | Detailed tracking of every eligible purchase | Minimal — most routine ITCs aren't claimed |
| Best suited for | Businesses with high deductible expenses | Businesses with low overhead relative to revenue |
| Administrative effort | Higher | Lower |
| Eligibility | Available to any registrant meeting the general rules | Restricted to eligible small businesses under CRA's revenue and activity criteria |
Who Is Eligible for the Quick Method
Eligibility depends on factors CRA sets, including a revenue ceiling and the nature of the business — certain professions and activities are excluded from using the Quick Method altogether. The specific eligibility thresholds are adjusted from time to time, so confirm current eligibility directly with CRA or a tax professional rather than assuming your business qualifies based on general information.
Why the "Savings" Isn't Automatic
The Quick Method can produce a lower net remittance than the regular method for a business with modest expenses relative to its revenue — you keep the gap between the tax you collected and the smaller prescribed amount you remit, effectively as compensation for giving up detailed ITC tracking. But a business with substantial HST-bearing expenses (equipment, subcontractors, inventory) can come out ahead under the regular method instead, because its actual input tax credits may exceed what the Quick Method formula would have saved it.
There is no shortcut around running an actual side-by-side calculation using your real numbers. What works well for a service business with low overhead can be the wrong choice for a business with heavy purchasing costs.
Making the Decision
- Confirm you're eligible. Check the current CRA eligibility rules for your business type and revenue level.
- Estimate your typical HST-bearing expenses for a representative period.
- Calculate net tax both ways using your actual revenue and expense figures.
- Factor in the administrative time saved by the Quick Method, which has real value even if the dollar difference is modest.
- Revisit the comparison periodically — your expense profile can shift as your business grows, changing which method comes out ahead.
Frequently asked questions
Can I switch between the Quick Method and the regular method later?
Generally yes, subject to CRA's election rules and timing requirements, but switching isn't instantaneous — there are procedures and effective dates to follow. Get advice before assuming you can change mid-year.
Does the Quick Method mean I charge customers less HST?
No. You still charge the full applicable HST rate on your invoices. The Quick Method only changes how you calculate what you remit to CRA — not what you charge your customers.
If I use the Quick Method, do I lose all input tax credits?
Not entirely. Most routine operating expenses are excluded from separate ITC claims under the Quick Method, but certain capital property purchases remain eligible for credits under their own rules. Confirm which purchases qualify before assuming none of them do.
Is the Quick Method available to every small business?
No — certain professions and business types are excluded, and there's a revenue ceiling for eligibility. Check the current criteria before assuming you qualify.
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