Supplies Not Eligible for the GST/HST Quick Method (CRA Rules Explained)
The Quick Method of Accounting for GST/HST is designed to simplify tax reporting for many Canadian small businesses. Instead of tracking GST/HST paid on every expense, eligible businesses apply a CRA-prescribed remittance rate to their taxable sales and remit that amount to the Canada Revenue Agency (CRA).
While the quick method can reduce administrative burden and, in some cases, lower the amount of GST/HST remitted, it does not apply to all supplies. The CRA clearly outlines specific situations where the quick method cannot be used, even if your business has elected to use it.
Understanding these exclusions is essential to remaining CRA-compliant and avoiding costly reassessments.
How the Quick Method Normally Works
Under the quick method, you:
Charge GST/HST to your customers at the applicable rate (5%, 13%, or 15%)
Apply a fixed remittance rate to your taxable sales
Remit that calculated amount to the CRA instead of the actual tax collected
However, when a supply is not eligible, the quick method remittance rate must not be used.
Instead, the CRA requires you to:
Account for the supply as if the quick method election were not in effect
Report and remit the full amount of GST/HST charged on that supply
For example, if you make a non-eligible supply and charge 5% GST, you must remit 100% of the GST collected, not a reduced quick method percentage.
Supplies That Are Not Eligible for the Quick Method
According to the CRA’s Quick Method of Accounting for GST/HST, the following supplies are excluded from the quick method calculation.
1. Supplies Where the Customer Does Not Pay GST/HST
The quick method does not apply when no tax is payable by the customer, including:
Zero-rated supplies, such as certain basic groceries or exported goods
Supplies made outside Canada, which are outside the scope of GST/HST
Certain supplies made to Status Indians, where GST/HST relief applies under CRA rules
Since no GST/HST is collected, these supplies are excluded from the quick method calculation.
2. Sales of Real Property
Sales of real property are always excluded from the quick method. Real estate transactions follow specialized GST/HST rules and must be reported separately, regardless of whether your business uses the quick method for other activities.
3. Sales of Capital Assets
The sale of capital assets—such as vehicles, equipment, machinery, or furniture used in your business—is not eligible for the quick method.
When a capital asset is sold, the business must:
Charge GST/HST as required
Remit the full amount of tax collected
The quick method remittance rate cannot be applied.
4. Supplies Made as an Agent or Auctioneer
If you act as an agent or auctioneer, and you are required to account for GST/HST collected on behalf of another party, those supplies are excluded from the quick method.
This distinction is important, as agents often handle tax that does not belong to them directly.
5. Taxable Benefits to Employees or Shareholders
Supplies of property or services provided to:
Employees, or
Shareholders
that result in a taxable benefit for income tax purposes are not eligible for the quick method.
In these cases, GST/HST must be accounted for based on the value of the benefit included in the individual’s income.
6. Self-Assessed Supplies for Personal or Related Use
The quick method cannot be used when you are required to self-assess GST/HST, including situations where business property or services are appropriated for the personal benefit of:
The business owner
A shareholder, partner, or beneficiary
A member of the organization or a related person
This applies to non-capital property and services taken out of the business.
7. Warranty Reimbursements Where ITCs or Rebates Were Claimed
If you receive a warranty reimbursement for property or services you acquired, and you were entitled to claim an Input Tax Credit (ITC) or rebate on that purchase, the quick method does not apply.
You must self-assess GST/HST and remit the appropriate amount directly to the CRA.
Why These Exclusions Matter
Many businesses using the quick method assume it applies to all sales, which is not the case. The CRA commonly reviews:
Asset sales
Owner or shareholder benefits
Mixed taxable and non-taxable supplies
Incorrectly applying the quick method to excluded supplies can result in:
CRA reassessments
Interest charges
Penalties
Proper classification is essential to protecting your business.
Get Professional Help With the GST/HST Quick Method
At Ali Asghar CPA, we help Canadian business owners:
Determine whether the quick method is appropriate
Identify supplies that must be excluded
Ensure GST/HST filings are accurate and CRA-compliant
If your business has complex transactions or mixed supplies, professional guidance can help you avoid expensive mistakes.
