Quick method of accounting (GST/HST)
The quick method of accounting is a simplified way for eligible businesses to calculate the GST/HST they remit. The business still charges tax in the usual way but remits a percentage of its tax-included sales, and the CRA says it cannot claim input tax credits on most of its purchases while using it.
A small business buyer meets the quick method when a seller reports GST/HST in this simplified way. The CRA says that with it you charge and collect the tax on taxable supplies in the usual way, but multiply taxable supplies including tax by the quick method remittance rate, so you remit only part of the tax you charged. The part not remitted is reported as income on your income tax return.
What to check
- Whether the business is an eligible type, since some persons cannot use the method
- Whether the election was made on time and is still in effect, because the CRA says an election generally stays in effect until revenue limits or business type end eligibility
- That no input tax credits were claimed for operating expenses; capital equipment purchases are treated differently
- The CRA says a business that revokes the election waits at least one year before electing again
See GST/HST registration. For how tax is handled in a sale, read GST/HST on a business sale.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentQuick Method of Accounting for GST/HST
- 02Canada Revenue AgencyGovernmentGeneral Information for GST/HST Registrants (RC4022): coin-operated machines
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