Quick Method Eligibility and Threshold Calculator
The quick method has two four-quarter tests, an excluded-business list that catches most professional firms, and a rate that depends on how much you buy for resale. Work out whether you may elect, at which rate, and the year growth forces you back off it.
remittance rate that applies
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The Two Four-Quarter Tests
| Window | Quarters Counted | Total | Against the Limit |
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Everything That Has to Be Satisfied
| Condition | What It Requires | Your Position |
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Rate, Credit and Deadline
| Item | Basis | Result |
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How Long the Election Will Last
| Year | Projected Supplies | Position |
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Points That Decide This
What to Do Next
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Disclaimer: The quick method of accounting is available under section 227 of the Excise Tax Act and the Streamlined Accounting (GST/HST) Regulations to registrants whose taxable supplies, including those of associated persons and including the tax, made in the four fiscal quarters ending in the last five fiscal quarters do not exceed the prescribed threshold, commonly stated as $400,000. Certain persons may not use the method, including listed financial institutions, charities, municipalities, universities, public colleges, school authorities and hospital authorities, certain non-profit organisations, and persons whose business consists of providing bookkeeping, accounting, tax return preparation or financial consulting services, legal services, actuarial services or, in Quebec, notarial services. The remittance rate depends on the province of the permanent establishment and on whether the registrant is a reseller of goods; the reduced rate for resellers applies where the cost of goods purchased for resale, including tax, is at least a prescribed proportion, commonly stated as 40%, of taxable supplies for the relevant period. A credit of 1% is generally available on the first $30,000 of eligible supplies in a fiscal year. The election is made on form GST74 and is subject to timing requirements that depend on the reporting period; an election generally must remain in effect for at least a year. Where the threshold is exceeded the election ceases to apply, and the precise period from which the registrant must return to the regular method depends on when the threshold was crossed and should be confirmed. The rates, the threshold, the credit base and the resale proportion used here are defaults that should be confirmed against the current legislation and published guidance. The projection of future years assumes uniform growth and is illustrative only. This page is general information, not tax advice.
Two Windows, Not One
The threshold test is not simply last year’s revenue. It looks at the four fiscal quarters ending in the last five fiscal quarters, and with five quarters of history there are two such windows. Both matter, which is why a business that was comfortably under the limit a year ago can fail today.
The figures counted are taxable supplies including the tax you charged, not net revenue. That inflates the number by thirteen per cent in Ontario before anything else, and it is the most common reason a business that thinks it is under the limit is not.
Associated persons count too. The supplies of associated corporations are included in the test. Two companies under common control, each with three hundred thousand of supplies, are over the limit together even though neither is alone.
Some Businesses Can Never Use It
The exclusions are drawn by activity rather than by size, and they catch a large share of professional service firms. A practice providing bookkeeping, accounting, tax return preparation or financial consulting is excluded, as are legal and actuarial services.
Charities, municipalities, universities, public colleges, school authorities, hospital authorities, certain non-profits and listed financial institutions are excluded as well. For these, the threshold arithmetic never arises.
| Business | Quick Method |
|---|---|
| Accounting, bookkeeping, tax preparation | Excluded |
| Legal, actuarial, financial consulting | Excluded |
| Charities, municipalities, public institutions | Excluded |
| Listed financial institutions | Excluded |
| Trades, consultants, retailers, most others | Available, subject to the threshold |
Consulting is not automatically excluded. The exclusion is for financial consulting specifically. A management, marketing or engineering consultancy is not caught by that wording, though the line is worth confirming where the advice given is financial in nature.
Which Rate Applies
Ontario has two remittance rates. The lower one is for registrants who resell goods, and it applies where the cost of goods bought for resale, including tax, reaches a set proportion of taxable supplies, commonly stated as forty per cent.
Everyone else uses the higher rate. The distinction reflects the fact that a reseller has far more input tax credits being given up under the quick method than a service business does, so the remittance rate has to be lower to compensate.
A business close to that forty per cent line should measure it rather than estimate, because the difference between the two rates is large and it applies to every dollar of supplies.
The One Per Cent Credit
A credit of one per cent applies to the first thirty thousand dollars of eligible supplies each fiscal year. It is small in absolute terms but it is worth claiming, and it is frequently missed by businesses filing their own returns.
The Election Has a Deadline
The election is made on form GST74 and the timing depends on how often you file. An annual filer has until the first day of the second fiscal quarter of the year the election is to take effect. A monthly or quarterly filer has until the due date of the return for the first period it is to apply to.
Miss it and the election takes effect from a later period rather than the one intended, so a business deciding in the middle of a year should check which period it can realistically start from.
An election is not a one-year experiment. Having elected, a registrant is generally expected to stay on the method for at least a year. Switching back and forth to suit a particular year’s numbers is not available.
Growth Ends It
The quick method suits a business below the threshold, and a business that keeps growing will cross it. When that happens the election ceases and the regular method resumes, which means going back to tracking input tax credits on every purchase.
That transition is worth anticipating rather than discovering. The bookkeeping under the regular method is more detailed, and a business that stopped tracking input tax credits while on the quick method has to restart that discipline, ideally before the change rather than after.
Crossing the line mid-year does not let you finish the year on the quick method. The election stops applying from a period determined by when the threshold was crossed, so a fast-growing business should watch the rolling four-quarter total rather than waiting for the year end to find out.
What This Calculator Does Not Cover
- Whether the quick method saves money, which depends on your input tax credits
- Provinces other than Ontario, which have their own remittance rates
- Registrants with permanent establishments in several provinces
- The special quick method for certain public service bodies
- Whether particular supplies are eligible for the method or excluded from it
- The exact period from which the regular method resumes once the limit is passed
Eligibility is the first question and savings is the second. Once you know you may elect, the quick method savings calculator compares it against the regular method on your own numbers, and our GST/HST filing service handles the election and the returns.
Frequently Asked Questions
Common questions on quick method eligibility.
Related Calculators and Guides
More tools for GST/HST registrants.
Check Eligibility Before the Election, Not After the Audit
Send us five quarters of sales figures and the details of any associated corporations. We will confirm whether both four-quarter tests are met, which remittance rate applies, when the GST74 is due, and the year growth will take you back to the regular method.