HST Quick Method excluded businesses in Ontario: who cannot use it

Businesses that cannot use the Quick Method

CRA guide RC4058 lists the types of business that cannot elect the Quick Method, no matter how small their sales are:

Being on this list is separate from the other Quick Method conditions. Even a business that is not excluded still needs a permanent establishment in Canada, annual worldwide taxable supplies (GST/HST included, with associates) of $400,000 or less, and to meet the 365-day rule. The GST74 election guide walks through those checks.

Bookkeepers, accountants, tax preparers and lawyers

For most Ontario sole proprietors, this is the exclusion that matters. If you sell bookkeeping, financial consulting, tax consulting or tax return preparation services, RC4058 says you cannot use the Quick Method. The same applies to legal, accounting and actuarial services provided in the course of a professional practice. In practice, many of the businesses that know the Quick Method best are the ones that cannot use it themselves.

The exclusion is about the kind of service, not your job title. A freelance web developer, photographer or management consultant who does not provide financial or tax consulting is not on the list. If your business mixes excluded and non-excluded work, RC4058 does not set out a simple percentage test, so ask CRA before you elect. CRA's GST/HST rulings and interpretations service is free.

Charities, non-profits and public bodies

Charities, qualifying non-profit organizations, municipalities, universities, public colleges, school authorities and hospital authorities cannot use the regular Quick Method in RC4058. Many of them can use a different option instead: the special quick method of accounting for public service bodies. It has its own remittance rates and is elected on Form GST287, not Form GST74. This site's calculator uses the RC4058 rates, so it does not apply to those organizations.

Who usually can use it

RC4058 gives examples of businesses that typically use the services rates, such as auto repair shops, caterers, delivery services, dry cleaners, house-cleaning services, painting contractors, photographers, small manufacturers, taxi drivers and travel agencies. Retailers that buy goods to resell, such as convenience stores, boutiques and art and craft shops, may qualify for the lower goods-for-resale rates. For an Ontario business charging 13% HST, those are 8.8% for services and 4.4% for goods.

If your business changes after you elect

RC4058 says that if you add a new service or significantly change what you sell, you have to check whether you can still use the Quick Method. If you start carrying on an excluded type of business, the election stops and you go back to the regular method:

• Annual filers: at the beginning of your next fiscal year, if you became a person that cannot use the Quick Method during your current fiscal year.
• Monthly or quarterly filers: at the beginning of a fiscal quarter, if you began to carry on that type of business in that fiscal quarter.

Once you stop using the Quick Method, RC4058 says you cannot claim ITCs for tax paid on purchases made while you used it, other than ITCs you were entitled to but did not claim.