COMMON GST/QST MISTAKES TO AVOID – A HANDY CHECKLIST

GST/QST compliance seems simple, but many Quebec businesses make avoidable mistakes that lead to penalties, refund delays, incorrect filings, or even full audits. Some errors come from misunderstandings of the rules, while others arise from rushed bookkeeping, disorganized documentation, or incorrect system settings. This handy checklist outlines the most common GST/QST mistakes businesses make — and how to avoid them — so you can keep your filings accurate, your records audit-ready, and your business fully compliant.

Understanding these pitfalls helps entrepreneurs prevent costly corrections and reduce the risk of scrutiny from Revenue Québec.

LEGAL AND REGULATORY FRAMEWORK

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QST), businesses must:
• properly charge GST and QST on all taxable supplies
• file returns by the required deadlines
• remit tax collected
• claim input tax credits correctly
• maintain complete documentation
• follow the place-of-supply and tax rate rules

Errors related to these obligations can result in reassessments, penalties, and interest.

KEY COURT DECISIONS

Courts consistently affirm that taxpayers are responsible for understanding and applying GST/QST rules correctly. Judges have upheld reassessments where businesses:
• used the wrong tax rate
• did not collect tax when required
• claimed credits without valid documentation
• mixed personal and business expenses
• relied on estimates rather than evidence

Courts have also rejected arguments based on ignorance or software errors, reinforcing that accurate compliance is a business obligation.

WHY CRA AND REVENU QUÉBEC TARGET COMMON MISTAKES

Businesses that repeatedly make simple mistakes often draw attention during routine system checks. Common audit triggers include:
• inconsistent tax reporting
• incorrect tax rates
• mismatches between sales and deposits
• high or unusual input tax credits
• refunds without supporting documentation
• late filings or late payments

Avoiding these errors helps reduce audit likelihood and ensures faster refund processing.

COMMON GST/QST MISTAKES TO AVOID – A HANDY CHECKLIST

Use this checklist to identify and eliminate the most frequent sales tax errors.

1. Charging the wrong tax rate
   Businesses often apply:
   • GST without QST in Quebec
   • outdated rates
   • incorrect HST/GST/QST for out-of-province customers
   Always verify place-of-supply rules and ensure tax codes are updated.

2. Failing to register on time
   Businesses exceeding the $30,000 threshold must register immediately. Late registration leads to retroactive tax obligations and penalties.

3. Not including GST/QST numbers on invoices
   Missing registration numbers make your invoices non-compliant and jeopardize your clients’ input tax credits.

4. Relying on manual tax calculations
   Manual math errors are extremely common. Use automated software or POS systems set up with correct GST/QST rates.

5. Claiming input tax credits without proper invoices
   Credits require supplier GST/QST numbers, descriptions, and proof of payment. Missing documentation leads to denied claims.

6. Mixing personal and business purchases
   Input tax credits apply only to business-related expenses. Personal expenses must be excluded or properly allocated.

7. Misclassifying taxable vs. exempt supplies
   Certain goods and services are exempt or zero-rated. Misclassification causes incorrect tax collection and reporting.

8. Forgetting to claim all eligible ITCs
   Startups, contractors, and busy entrepreneurs often overlook recurring charges, digital receipts, or small expenses.

9. Failing to reconcile GST/QST accounts
   If you don’t match tax collected and tax paid to your ledger, discrepancies accumulate and lead to filing mistakes.

10. Filing late or missing deadlines
    Late filings trigger penalties, interest, and audit flags. Setting reminders prevents avoidable delays.

11. Ignoring refund verification requests
    Revenue Québec may ask for documentation before issuing refunds. Slow responses delay processing.

12. Applying tax incorrectly on returns, deposits, or credit notes
    Deposits, progress billing, and refunds require specific tax treatment. Mistakes often cause incorrect remittances.

13. Incorrect sales tax on interprovincial sales
    Place-of-supply rules determine whether you charge GST, HST, QST, or PST. Misunderstanding these rules creates misapplied tax.

14. Using outdated POS or accounting software settings
    Systems must be updated after any tax changes. Outdated software produces systematic errors.

15. Not preparing audit-ready documentation
    Revenue Québec can request documents anytime. Businesses with disorganized records face higher adjustment risks.

MACKISEN STRATEGY

Mackisen CPA helps businesses avoid GST/QST mistakes through structured compliance reviews, detailed system checks, training, and ongoing tax support. We analyze your invoicing, tax coding, POS setup, and documentation systems to identify weaknesses before they become audit issues. Our team corrects errors, files adjustments, and ensures your GST/QST processes remain accurate and efficient.

REAL CLIENT EXPERIENCE

A Montreal retailer consistently charged GST but not QST due to POS misconfiguration. Mackisen corrected their setup, filed adjustments, and avoided a substantial reassessment.

A consultant claimed expenses without supplier registration numbers. Mackisen rebuilt the documentation and salvaged a significant portion of their ITCs.

An e-commerce seller misapplied place-of-supply rule for HST provinces. Mackisen corrected tax codes and prevented penalties during a follow-up review.

COMMON QUESTIONS

Can software mistakes excuse incorrect GST/QST
No. Courts have ruled that businesses are responsible for system accuracy.

What if I discover a mistake months later
You can file an adjustment or amended return. Prompt correction reduces penalties.

Do all small businesses make these mistakes
Many do. A structured checklist helps eliminate avoidable errors.

Are common mistakes a major audit trigger
Yes. Revenue Québec often reviews businesses with recurring inconsistencies.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Quebec businesses avoid common GST/QST mistakes through expert oversight, system optimization, and proactive compliance strategies. We protect your business from penalties, delays, and unnecessary audit exposure.