The GST quick method: a simpler way to remit for a small BC business

Short answer: the quick method lets a small GST registrant charge GST as usual but remit a percentage of its GST-inclusive sales, instead of the GST collected less input tax credits on every purchase. A business can elect it if its worldwide taxable sales, with its associates, are within the CAD 400,000 limit (GST included, as the CRA describes it), counted over four consecutive fiscal quarters. RC4058 sets out exactly how the test is counted. The election is made on form GST74 or through the CRA account, and it applies to GST only. BC PST is separate.

How does it work?

• You charge customers GST at the usual rate, and show it on invoices as before.
• On the return, you remit a percentage of your GST-inclusive sales. The percentage is lower than the rate you charged, because it allows for the input tax credits you no longer claim line by line.
• You get a 1% credit on the first CAD 30,000 of eligible sales each fiscal year, GST included.
• The percentage depends on the province and on whether the business provides services or buys goods for resale. The CRA’s RC4058 guide has the table for BC.

The credit in an illustration with made-up numbers: 1% of CAD 30,000 is CAD 300 off the amount remitted in the year.

Who can use it, and who should not?

• The sales test above, and a permanent establishment in Canada.
• Some businesses and some kinds of supplies are excluded, including some professional-service businesses. RC4058 lists them, so read it before electing, whatever your trade.
• It tends to suit a business with few purchases on which GST is paid. A business with large GST-bearing purchases of inventory or supplies can be worse off, because most input tax credits are no longer claimed. RC4058 explains which purchases can still be claimed.

How do I elect, and can I leave?

• File form GST74, or elect through the CRA business account.
• The election starts on the first day of a GST reporting period.
• Once you elect, you have to stay in for at least a year.
• After you revoke the election, you wait at least a year before you can elect again.

What your books need to show

• GST-inclusive sales for each reporting period, since the percentage applies to them.
• Which sales are eligible and which are not, such as sales that are outside the method.
• PST kept separate, collected and reported on its own return.
• The date the election began. RC4058 sets out when it can first be ended.

GST registration and input tax credits →

Late GST returns and penalties →

BC small business tax calendar →

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