GST Quick Method for BC contractors: how it works and when it saves money

The GST Quick Method lets a small BC business remit a flat 3.6% of its GST-included sales (1.8% if it mainly resells goods) instead of tracking every input tax credit, and keep the difference between that and the 5% GST it collected. It is available if your annual worldwide taxable sales, including GST and including associated businesses, are $400,000 or less, and it saves money when your GST-taxable expenses are low relative to your sales.

You still charge customers the full 5% GST. The Quick Method only changes what you send to the CRA.

The rules that apply in BC

BC is a 5% GST province with a separate 7% PST (CRA: GST/HST rates). The Quick Method does nothing to PST. Everything below comes from CRA guide RC4058: CRA: Quick Method of Accounting.

  • Eligibility: revenue from annual worldwide taxable supplies, including GST and zero-rated sales, and including associates, of not more than $400,000.

  • Who is excluded: people providing legal, accounting or actuarial services, and bookkeeping, financial consulting, tax consulting or tax preparation services, among others. Trades are not excluded.

  • Remittance rate, service businesses in a 5% GST province: 3.6% of GST-included sales. Most contractors, electricians, plumbers and landscapers fall here.

  • Remittance rate, goods for resale: 1.8%, but only if your cost of goods purchased for resale in the previous year was at least 40% of your taxable sales. A supply-and-install business that is mostly labour does not qualify for the 1.8% rate.

  • 1% credit: you get a 1% credit on the first $30,000 of GST-included eligible sales each fiscal year, so the effective rate on that slice is 2.6%.

  • Capital assets: you can still claim input tax credits on capital purchases such as vehicles, tools and equipment (not real property). This is the part many owners miss.

  • Election: file online or with Form GST74. Quarterly and monthly filers must elect by the due date of the return for the period they start using it. Annual filers must elect by the first day of their second fiscal quarter.

  • Minimum term: once elected, you must stay on it at least one year, and after revoking you wait at least one year to elect again.

Worked example: a Kelowna electrician

Sales before GST: $200,000. GST collected at 5%: $10,000. GST-included revenue: $210,000.

Quick Method remittance:

  • 3.6% × $210,000 = $7,560

  • Less 1% credit on the first $30,000 = $300

  • Remit $7,260. The electrician keeps $2,740 of the $10,000 collected, and that $2,740 is taxable income.

Regular method depends on expenses. Say GST-taxable expenses (materials, fuel, phone, subcontractors) were $50,000, so input tax credits are $2,500. Remit $10,000 − $2,500 = $7,500. The Quick Method wins by $240.

If GST-taxable expenses were $70,000, input tax credits are $3,500 and the regular remittance is $6,500. The Quick Method loses by $760.

Break-even for this business: the Quick Method is better until input tax credits reach $2,740, which is $54,800 of GST-taxable expenses, or 27% of sales. Below that, elect. Above that, stay on the regular method. Add any year with a large truck or equipment purchase to the Quick Method side, because those credits are still claimable.

A general rule for BC trades: labour-heavy businesses (service calls, repairs, one-person operations) usually save. Material-heavy or subcontractor-heavy businesses (renovation contractors paying subs with GST, supply-and-install) usually lose, because the subs' invoices carry GST you would otherwise recover.

Rates verified on 2026-10-25.

FAQ

Do I still charge customers 5% GST on the Quick Method? Yes. Your invoices do not change. Only the calculation on your GST return changes.

Is the amount I keep taxable? Yes. The difference between GST collected and GST remitted is business income and goes on your T2125 or T2.

Can I claim input tax credits on my truck? Yes. Input tax credits on capital assets other than real property are still allowed under the Quick Method. Day-to-day expenses (fuel, materials, phone) are not; the 3.6% rate is meant to cover those.

What if I pass $400,000 in sales? The election stops applying from the start of the fiscal year after the one in which you exceed the limit, and you return to the regular method. Check the current rules in RC4058 for the exact transition date for your filing frequency.

Does the Quick Method affect PST? No. BC PST is a separate provincial tax with its own rules and returns. The Quick Method is a federal GST election only.

How do I decide each year? Compare 3.6% of GST-included sales (less the $300 credit) against GST collected minus actual input tax credits, using last year's numbers. If the Quick Method result is lower, elect. Remember the one-year minimum before you can switch back.

A trades owner should talk to an accountant when sales are approaching $400,000, when a big equipment year is coming, or when the mix shifts toward subcontractors, because any of those can flip which method is cheaper.

How Murtagh & Co. Can Help.

We work with trades and construction businesses across the Okanagan on bookkeeping, GST, payroll, tax and the numbers behind your pricing.

Murtagh & Co. was founded by Devon Murtagh, CFA, FRM, a former trades business owner.

Prefer to talk it through? Book a free 30-minute call, or reach out at info@murtaghco.ca.

More free tools for contractors: murtaghco.ca/contractor-toolkit