The Quick Method does not mean charging customers a lower tax rate. A business generally continues to charge GST/HST and QST at the normal rates and then uses prescribed remittance rates to calculate what it sends to the tax authorities. The difference is intended to simplify the recognition of tax paid on ordinary operating expenses.
Remittance rates vary with the type of activity and the location of the business’s permanent establishment. Old percentages should never be reused without checking the tables for the current reporting period.
Confirm eligibility before making the election
The Quick Method is available to certain small registered businesses. Total taxable supplies, including supplies of associated persons, generally have to remain below the prescribed ceiling. Several professions and activities are excluded, particularly where taxable inputs or input tax credits are central to the business.
In Quebec, Revenu Québec administers GST/HST and QST. The elections, effective dates and methods for both taxes should be coordinated rather than handled separately at the last minute.
Understand what the remittance rate represents
The remittance rate is applied to eligible tax-included sales under the rules of the method. It is not the tax rate charged to the customer. Two businesses with identical revenue may have different rates if one mainly provides services and the other resells purchased goods.
An additional credit may sometimes apply to an initial portion of supplies. Current guides should be used to confirm both rates and credits because the permanent establishment and business type affect the calculation.
Compare the Quick Method with the regular method
Under the regular method, a business generally remits tax collected less eligible input tax credits and input tax refunds. Under the Quick Method, most tax paid on ordinary operating expenses is not claimed separately; it is reflected in the simplified rate.
Certain credits may still be available for particular acquisitions, including some capital property. A business with significant investment, commercial rent or taxable subcontracting can be worse off under the Quick Method.
- Expected taxable sales for the year.
- Taxable expenses and credits that would be lost or retained.
- Business activity and applicable remittance rate.
- Administrative cost and current bookkeeping quality.
Make the election and keep compatible records
The election must be filed using the applicable procedure and deadline. It does not eliminate bookkeeping: sales, tax charged, capital assets and expenses must still be documented. Returns should also be reconciled with accounting revenue.
Using the wrong rate for several periods can create a significant balance. Our accounting service for self-employed individuals and tax compliance page can help review the calculation before the next remittance.
Choose the method using a numerical comparison
Apparent simplicity does not guarantee savings. A forecast based on actual expected sales and expenses can compare the Quick Method with the regular method and identify where the advantage changes.
Impôts Ici can confirm eligibility, compare the methods and configure the bookkeeping. To review your remittance rates, contact our team.
