CHECKLIST: ARE YOU CHARGING THE RIGHT GST/QST RATES?

Charging the correct GST and QST rates is one of the most fundamental requirements for any business operating in Quebec. Yet many companies unintentionally charge the wrong rates on invoices, POS systems, online platforms, or manual bills. Even small errors can lead to serious consequences such as customer complaints, denied input tax credits, audit adjustments, and penalties. This checklist helps you verify whether your business is charging the right GST/QST rates and applying them correctly across all products, services, and sales channels.

Because GST and QST rules differ by supply type, industry, and location, businesses must have clear classifications for taxable, zero-rated, and exempt transactions. Proper tax coding ensures that invoices, receipts, and returns are compliant and consistent.

LEGAL AND REGULATORY FRAMEWORK

GST is governed by the Excise Tax Act and QST by the Quebec Taxation Act. Quebec’s current rates are:
• GST: 5 percent
• QST: 9.975 percent

Businesses must collect GST and QST on all taxable supplies unless a specific exemption applies. When the wrong rate is charged—either too low or too high—Revenue Québec can reassess the business for under-collected tax and impose interest or penalties. If a business overcharges, it must refund customers or remit the overcharged amount to Revenue Québec.

Sales tax must also be calculated based on place-of-supply rules. Supplies to customers outside Quebec may require different rates or no QST at all.

KEY COURT DECISIONS

Courts have repeatedly confirmed that businesses are responsible for charging the correct tax rate. In cases where incorrect rates were applied, judges upheld reassessments even when businesses claimed misunderstanding or software errors. Courts emphasized that lack of knowledge does not excuse incorrect application of tax rates.

In disputes involving exempt and zero-rated supplies, courts insisted that businesses must document the nature of each supply clearly. Failure to prove that a supply was exempt or zero-rated resulted in full tax reassessments. These rulings reinforce the need for careful classification and accurate rate application.

WHY CRA AND REVENU QUÉBEC TARGET RATE ERRORS

Revenue Québec closely monitors rate-related errors because they often reflect deeper issues with bookkeeping, tax codes, product classification, or POS configuration. Common red flags include:
• charging GST but not QST
• charging QST but not GST
• using outdated rates
• inconsistent tax on similar transactions
• incorrect treatment of out-of-province or international sales
• misclassified exempt or zero-rated items

Businesses with manual invoicing, outdated POS systems, or complex product lines are especially vulnerable.

CHECKLIST: ARE YOU CHARGING THE RIGHT GST/QST RATES?

Use the following checklist to verify your compliance across all sales and invoicing methods.

1. Confirm your product and service classifications
   Review your catalogue and categorize each item as taxable, zero-rated, or exempt. Ensure staff and accounting systems use the same classifications.

2. Verify GST and QST rates in your POS system
   Check your point-of-sale settings to ensure GST and QST are applied automatically and correctly. Look for items coded without tax that should be taxable.

3. Review invoicing templates
   Confirm that invoices show GST and QST separately, list your registration numbers, and apply the correct rates. Manual invoices often contain rate errors.

4. Check online store tax settings
   Review your Shopify, WooCommerce, Amazon, Etsy, or custom platform tax configurations. Confirm that the platform recognizes Quebec customers and applies GST and QST accordingly.

5. Review out-of-province and international orders
   Apply place-of-supply rules:
   • Quebec customers generally require GST+QST
   • Other provinces may require GST or HST
   • International customers may be zero-rated

Ensure your system applies the correct combination.

6. Confirm tax rules on shipping, delivery, and installation
   Taxability of shipping and installation depends on the underlying supply. Confirm your system treats these consistently.

7. Review tax treatment for discounts and promotions
   Ensure that discounts do not change the tax rate or remove tax incorrectly. Tax should be calculated after the discount is applied.

8. Check recurring billing and subscriptions
   Ensure that automated billing applies the current GST/QST rates, especially after-tax updates or system changes.

9. Verify tax treatment for deposits and retainers
   GST/QST may apply when payment is received or when the invoice is issued. Ensure deposits are taxed correctly.

10. Review exempts or special cases
    Identify supplies to Indigenous customers, exported services, federally regulated sectors, or zero-rated supplies. Verify documentation supporting exemptions.

11. Inspect manual overrides
    Audit employees’ manual entries for cases where GST/QST was overridden or removed. Frequent overrides signal training or system issues.

12. Review recent tax changes
    Confirm your rates match current legislation. If rates change, ensure all systems and templates are updated immediately.

MACKISEN STRATEGY

Mackisen CPA reviews your GST/QST rate application across all systems: POS, invoicing, online platforms, recurring billing, and manual processes. We classify your supplies properly, verify rate accuracy, and identify discrepancies that could trigger audits. Our team prepares internal procedures, staff training guides, and tax mapping tools that prevent rate errors before they occur.

We conduct cross-platform audits for businesses using multiple channels and ensure consistent tax treatment. Mackisen also corrects historical rate errors through adjustments, credit notes, and amended returns when required.

REAL CLIENT EXPERIENCE

A retail boutique updated its POS system but failed to update QST rates on certain product categories. Revenue Québec noted inconsistencies in tax collected. Mackisen corrected the configuration, prepared adjustments, and ensured future compliance.

A contractor issued invoices with GST but forgot to charge QST on taxable services. Mackisen reviewed past invoices, corrected filings, and avoided penalties through proactive disclosure.

An e-commerce seller charged incorrect rates to Quebec clients due to outdated platform settings. Mackisen reconfigured tax rules and reconciled discrepancies for accurate future reporting.

COMMON QUESTIONS

Do I charge both GST and QST in Quebec
Yes. All taxable supplies made to Quebec customers require both taxes unless exempt or zero-rated.

What if I charged the wrong rate
You may need to issue credit notes or amended invoices and correct your GST/QST return.

Are online platforms reliable for tax calculations
Only if configured correctly. Many platforms require manual setup for Quebec-specific rules.

Do I need to apply QST outside Quebec
No, unless the place of supply rules requires it. Quebec tax applies primarily to supplies made in Quebec.

Can I be penalized for overcharging tax
Yes. Overcharged tax must be refunded or remitted, and failure to correct may result in penalties.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures that businesses apply the correct GST/QST rates across all systems. We help prevent under-collection, overcharging, and audit-triggering inconsistencies, keeping your business compliant and fully protected.