The GST/HST Quick Method, Explained
Most Canadian freelancers registered for GST/HST use the regular method by default: collect the tax, subtract the tax they paid on expenses, remit the difference. Few realize the CRA offers an alternative designed specifically for small service businesses — the Quick Method — under which you keep charging clients the full HST rate but remit a lower flat percentage of your sales and pocket the spread. For a service freelancer with modest expenses, that spread can be worth over a thousand dollars a year. The catch is real, though: you give up almost all of your input tax credits, the kept spread is taxable income, and some professions aren't allowed to use it at all. This guide walks through the mechanics, a worked Ontario example, who genuinely comes out ahead, and how the election works.
The Regular Method in One Paragraph
Under the regular method, you charge clients GST/HST at the rate for their place of supply, track the GST/HST you pay on business expenses, and remit the difference: tax collected minus input tax credits (ITCs). If you collected $7,800 in HST and paid $650 of HST on business expenses, you remit $7,150. The full mechanics — filing frequencies, the GST34 return, instalments, and payment methods — are covered in our quarterly GST/HST remittance guide. The regular method is the default; the Quick Method is something you must actively elect into.
How the Quick Method Changes the Math
The Quick Method replaces the collected-minus-ITCs calculation with a flat-rate one. Three things define it:
- You still charge clients the full GST/HST rate. Nothing changes on your invoices. An Ontario client still pays 13% HST on your fee.
- You remit a lower flat "remittance rate" applied to your tax-included sales. For a service business in an HST province like Ontario, the remittance rate is approximately 8.8% of sales including the HST you collected. The rate differs by province of both the business and the customer, and by whether you sell services or goods — verify your rate on canada.ca.
- You give up ITCs on operating expenses. The lower remittance rate is meant to compensate you, on average, for the ITCs you're surrendering. ITCs on eligible capital purchases (equipment, computers) can generally still be claimed.
On top of this, the CRA sweetens the deal with a 1% credit on the first $30,000 of eligible tax-included sales each fiscal year.
Worked Example: Ontario Service Freelancer
A consultant in Ontario bills $60,000 in fees to Ontario clients and collects 13% HST — $7,800 — for $67,800 in tax-included sales. Suppose they paid roughly $650 of HST on $5,000 of business expenses during the year.
| Regular Method | Quick Method (approx.) | |
|---|---|---|
| HST charged to clients | $7,800 | $7,800 (unchanged) |
| Remittance calculation | $7,800 − $650 ITCs | ~8.8% × $67,800 = ~$5,966, minus 1% × $30,000 = $300 |
| Remitted to CRA | $7,150 | ~$5,666 |
| Kept by the freelancer | — | ~$1,484 more (before income tax) |
The roughly $1,484 difference is the Quick Method spread. It is taxable business income (more on that below), so the after-tax benefit for a freelancer at a ~40% marginal rate is closer to $890 — still meaningful money for filing the same return with less ITC bookkeeping pressure.
Note what drives the result: this freelancer had only $650 of ITCs to surrender. The spread shrinks dollar-for-dollar as your GST/HST-bearing expenses grow.
Who Wins, Who Loses
The Quick Method Tends to Win For
- Service freelancers with low taxable expenses — consultants, designers, developers, writers, marketers whose main "inputs" are their own time, a laptop, and a few software subscriptions
- Home-based businesses whose largest costs (home office rent portion, insurance, mortgage interest) carry little or no GST/HST anyway
- Freelancers who hate ITC bookkeeping — you still keep receipts for income-tax deductions, but your HST return no longer depends on catching every ITC
The Quick Method Tends to Lose For
- Businesses with heavy GST/HST-bearing operating costs — subcontractors, materials, equipment rentals, significant travel. Every dollar of surrendered ITC eats the spread.
- Resellers and product businesses buying taxable inventory (they also use different, lower remittance rates — a separate calculation entirely)
- Anyone in an excluded profession. The CRA bars certain registrants from the Quick Method regardless of size — the list includes accountants, bookkeepers, financial consultants, lawyers, and several others. Check the current exclusion list on canada.ca before electing.
Eligibility also has a size ceiling: annual worldwide taxable sales (including associated businesses, and including the GST/HST itself) must be no more than roughly $400,000 — verify the current threshold. Most solo freelancers are comfortably under it.
The Catch List
1. Your Operating ITCs Are Gone
Once you elect, you cannot claim ITCs on operating expenses for the periods the election covers. If you have a high-expense year — a big conference, major travel, lots of subcontracting — the regular method would have refunded that HST and the Quick Method will not. Capital purchases are the main exception.
2. The Spread Is Taxable Income
The difference between HST collected and the amount remitted is included in your business income on your T2125. Compare methods on an after-income-tax basis.
3. It Doesn't Reduce What Clients Pay
The Quick Method is invisible to clients — it never makes you cheaper to hire. Anyone hoping to stop charging HST is thinking of deregistration, which is a different (and rarely advisable) conversation.
4. You're Committed for a Minimum Period
The election generally must stay in place for at least a year before you can revoke it. You can't flip between methods opportunistically based on which one wins each quarter.
5. You Still File and You Still Track
The Quick Method is not a filing exemption. You file the same returns on the same schedule, remit on the same deadlines, and still need clean records of your tax-included sales — and of your expenses, because income-tax deductions are unaffected by the election.
How to Elect — and How to Leave
Elect by filing Form GST74 (Election and Revocation of an Election to Use the Quick Method of Accounting) or, more conveniently, through CRA My Business Account. The election must generally be made on or before the due date of the return for the period in which you want it to take effect — you cannot apply it retroactively to periods whose returns are already due.
To leave, you revoke the election (same form) after the minimum commitment period, with the revocation generally taking effect from the start of a fiscal year. If your sales grow past the eligibility ceiling, you must return to the regular method.
Before electing, do the comparison with real numbers from a full year: total tax-included sales, total HST collected, and total GST/HST actually paid on expenses. If the flat-rate remittance beats collected-minus-ITCs by enough to survive the income-tax haircut, the Quick Method is worth a conversation with your accountant.
Getting the Two Numbers the Comparison Needs
The Quick Method decision comes down to two totals most freelancers can't produce on demand: the HST you collected across every invoice, and the GST/HST you paid across every expense. InvoiceFast tracks both sides. Every invoice records its HST separately from the subtotal, and the built-in expense tracker captures the GST and HST on every receipt you snap — so your T2125 summary shows total GST/HST paid and your claimable ITCs weighted by business use. Put the two numbers side by side and the method comparison stops being guesswork. InvoiceFast reports these totals for you and your accountant; it does not file GST/HST returns. Your first 25 expenses are free; Pro + Tax ($19/month or $169.99/year CAD) unlocks unlimited tracking and the summary exports.
Frequently Asked Questions
Do I still charge clients the full HST rate under the Quick Method?
Yes. Your invoices are identical under either method — 13% HST for an Ontario client, 5% GST for an Alberta client, and so on. The Quick Method only changes what you remit, not what you charge.
Can I claim any ITCs under the Quick Method?
Generally not on operating expenses — that's the trade. ITCs on eligible capital purchases such as computers and equipment can typically still be claimed. Verify the current capital-property treatment before electing.
Who is barred from using the Quick Method?
Registrants above roughly $400,000 in annual worldwide taxable sales (tax included, counting associated businesses), and certain listed professions regardless of size — including accountants, bookkeepers, financial consultants, and lawyers. Check the CRA's current list.
Is the spread I keep taxable?
Yes — it's business income on your T2125. Compare the methods after income tax, not before.
How do I switch back to the regular method?
Revoke the election with Form GST74 (or My Business Account) after the minimum commitment period — generally at least a year — with the change taking effect from the start of a fiscal year.