Doing Business in Quebec? What You Need to Know About QST – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Quebec operates the most complex and strictly enforced provincial sales tax system in Canada. Whether you are a freelancer, online seller, incorporated business, or foreign company, doing business in Quebec may require you to register for QST, charge the correct tax rate, file separate returns, and maintain additional documentation. Many businesses mistakenly assume that registering for GST/HST is enough—but QST is entirely separate, administered by Revenu Québec, with its own set of rules. Misunderstanding these requirements leads to costly reassessments, penalties, backdated QST amounts, and even collection action. This guide explains everything businesses need to know about QST: when you must register, how to charge it, how it differs from GST/HST, and how to stay compliant in Canada’s most tightly regulated province.

Legal and Regulatory Framework

QST is governed by the Québec Sales Tax Act under the Tax Administration Act (TAA) and administered by Revenu Québec, not CRA. Key rules include:

1. QST Rate

• The QST rate is 9.975%, charged in addition to the 5% GST.
• QST is calculated on the GST-inclusive price (unique to Quebec).

2. When Registration Is Required

You must register for QST if:
• you carry on business in Quebec,
• you have a permanent establishment in Quebec,
• you make taxable supplies in Quebec and exceed the $30,000 small-supplier threshold, or
• you are a remote seller making supplies to Quebec consumers under the Specified QST System.

3. Separate Tax Number

• You must obtain a QST number distinct from your GST/HST number.
• Quebec does not accept GST-only registration for QST obligations.

4. Filing Requirements

• QST returns are filed separately from GST/HST returns.
• Filing frequencies mirror GST (annual, quarterly, monthly) depending on revenue.
• Input tax refunds (ITRs) replace federal ITCs.

5. Exemptions and Zero-Rated Supplies

Similar to GST/HST, QST does not apply to certain:
• health services,
• education services,
• financial transactions,
• long-term residential leases,
• certain agricultural products.

These legal rules form the foundation for QST compliance in Quebec.

Key Court Decisions

Several important cases highlight the strict nature of QST enforcement.

In Revenu Québec v. HomeAway, the court ruled that even foreign digital platforms must collect QST when supplying services to Quebec consumers—expanding the reach of QST beyond provincial borders.

In Okawe v. Revenu Québec, a business operating in Quebec but registered only for GST/HST was reassessed for backdated QST. The court upheld the reassessment, reinforcing Quebec’s independent tax regime.

In Corlac Inc. v. Revenu Québec, ITR claims were denied because invoices lacked Quebec-required documentation, showing that Quebec applies its own invoice standards.

In Distribution A.B.C. v. RQ, Revenu Québec successfully proved that a business had a permanent establishment in Quebec even without a physical office, due to substantial operations in the province.

These decisions confirm Quebec’s aggressive enforcement of QST obligations.

Why Revenu Québec Targets This Issue

Revenu Québec is known for having the most aggressive and efficient audit system in Canada. They target businesses that:

• operate in Quebec but are registered only federally
• exceed the $30,000 threshold without registering for QST
• sell online to Quebec consumers without charging QST
• claim improper ITRs (input tax refunds)
• misapply exemptions or zero-rated rules
• underreport revenue in QST filings
• provide invoices without correct QST details
• file GST returns but omit corresponding QST filings

Revenu Québec cross-checks:
• bank deposits,
• Stripe and PayPal records,
• e-commerce platform sales (Shopify, Etsy, Amazon),
• federal CRA filings,
• Quebec business registries (NEQ), and
• employer payroll data.

This makes QST compliance essential for every business serving Quebec clients.

Mackisen Strategy

At Mackisen CPA Montreal, we help businesses navigate Quebec’s unique tax environment safely and efficiently. Our QST compliance strategy includes:

• determining whether your business must register for QST or the Specified QST System
• obtaining your QST registration number and coordinating with GST/HST registration
• preparing QST-compliant invoicing templates
• applying correct QST/GST combinations and calculating tax on the GST-inclusive base
• structuring bookkeeping for dual-tax reporting (GST and QST)
• preparing QST returns and reconciling ITRs
• training businesses on place-of-supply rules for Quebec customers
• preparing audit-ready documentation for Revenu Québec
• resolving past non-compliance through voluntary disclosure when needed

This ensures full compliance and protects businesses from aggressive reassessments.

Real Client Experience

A digital marketing business serving Quebec clients charged GST but not QST for two years. Revenu Québec reassessed $18,000 in uncollected QST. We filed a Voluntary Disclosure Program (VDP) application, reducing penalties and interest significantly.

A Toronto e-commerce seller unknowingly triggered the Specified QST System by selling to Quebec consumers. Revenu Québec contacted them for backdated registration. We registered them properly, adjusted filings, and prevented further penalties.

A Montreal consultant claimed ITRs on expenses but lacked QST-compliant invoices. Revenu Québec denied all credits. We corrected invoices, educated the client, and implemented proper documentation systems.

Common Questions

Business owners often ask whether registering for GST automatically covers QST. It does not—QST is separate.
Others ask whether they need to register even if they work from outside Quebec. Yes—if selling to Quebec consumers under specific rules.
Some ask whether QST applies to digital products. Yes—Quebec enforces digital tax rules aggressively.
Another question: Does QST apply to revenue under $30,000? Not if you remain a small supplier, unless you fall under the remote seller rules.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal guides businesses through Quebec’s strict QST requirements with ease. Whether you operate locally, nationally, or internationally, our team ensures full compliance, accurate filings, and protection from Revenu Québec.