GST/QST COMPLIANCE CHECKLIST: ARE YOU FOLLOWING ALL THE RULES?

GST/QST compliance is one of the most important administrative responsibilities for Quebec businesses. Proper compliance ensures accurate tax collection, prevents penalties, avoids refund delays, and minimizes the risk of a Revenue Québec audit. Yet many businesses unintentionally violate sales tax rules because they rely on manual systems, confuse taxable and exempt transactions, or neglect to keep adequate documentation. This comprehensive GST/QST compliance checklist helps you evaluate whether your business is fully aligned with provincial and federal requirements — and where improvements may be needed.

A strong compliance system protects your business, strengthens financial reporting, and maintains credibility with clients, suppliers, lenders, and tax authorities.

LEGAL AND REGULATORY FRAMEWORK

Sales tax compliance in Quebec falls under the Excise Tax Act (GST) and the Quebec Taxation Act (QST). Once a business is registered for GST and QST, it must:
• charge GST and QST on all taxable supplies
• file returns by the required frequency (monthly, quarterly, or annually)
• remit tax collected by the due date
• maintain compliant invoices and documentation
• claim input tax credits only where eligible
• keep records for at least six years

Revenue Québec administers both GST and QST in the province, making accurate reporting and documentation essential.

KEY COURT DECISIONS

Courts consistently uphold that businesses must meet strict compliance standards for GST/QST. In numerous cases, taxpayers attempted to justify missing invoices, incorrect classifications, or inaccurate returns. Judges ruled that the obligations under the Excise Tax Act and Quebec Taxation Act are mandatory and that honest errors do not excuse non-compliance.

In cases involving refund disputes, courts supported Revenue Québec’s right to withhold refunds until complete documentation was provided. These decisions reinforce the need for organized compliance systems.

WHY CRA AND REVENU QUÉBEC TARGET NON-COMPLIANCE

Non-compliance often indicates broader accounting issues. Tax authorities look for:
• inconsistent GST/QST filings
• missing supplier invoices
• incorrect tax rates
• misclassified exempt vs. taxable supplies
• overstated or unsupported input tax credits
• unpaid tax balances
• repeated late filings

Industries with high transaction volumes or complex billing — such as retail, restaurants, construction, consulting, e-commerce, wellness services, and professionals — are especially monitored.

GST/QST COMPLIANCE CHECKLIST: ARE YOU FOLLOWING ALL THE RULES?

Review each section carefully to evaluate your compliance.

1. Registration Compliance
   • Are you properly registered for GST/QST?
   • Did you register before exceeding the $30,000 threshold?
   • Are your GST and QST numbers included on all invoices and contracts?

2. Invoicing Compliance
   • Do invoices include required legal details?
   • Are GST/QST amounts presented separately?
   • Are tax rates applied correctly on every invoice or POS receipt?
   • Are manual overrides avoided except when justified?

3. Product and Service Classification
   • Are all supplies classified as taxable, zero-rated, or exempt?
   • Are exemptions properly documented?
   • Are digital services, shipping, and installation taxed correctly?

4. Tax Collection Controls
   • Are GST and QST collected consistently on all taxable sales?
   • Does your POS or e-commerce platform apply the correct rates automatically?
   • Are out-of-province sales treated using place-of-supply rules?

5. Input Tax Credits (ITCs/ITRs)
   • Do you have complete supplier invoices with tax details?
   • Are personal or mixed-use expenses excluded?
   • Are credits claimed only after GST/QST registration?
   • Are capital expenses documented and classified properly?

6. Documentation and Record Keeping
   • Are invoices, receipts, bank statements, and contracts kept for six years?
   • Is documentation digitized and organized by month?
   • Do you maintain records for credit notes, returns, and refunds?

7. Reconciliation Procedures
   • Do you reconcile GST/QST collected and paid every month?
   • Do totals match bank deposits, POS reports, and ledger balances?
   • Are discrepancies corrected before filing?

8. Filing and Remittance Procedures
   • Are returns filed on time each period?
   • Are tax payments made by the deadline?
   • Do filing amounts align with financial statements?

9. Refund Verification Readiness
   • Do you maintain audit-ready folders for each period?
   • Can you provide supporting documents quickly if Revenue Québec requests them?

10. Internal Controls and Training
    • Are staff trained to apply GST/QST correctly?
    • Are accounting system tax codes reviewed regularly?
    • Are procedures updated after tax law changes?

MACKISEN STRATEGY

Mackisen CPA helps businesses achieve full GST/QST compliance by reviewing internal processes, documentation systems, tax coding, and filing practices. We perform compliance audits, reconcile tax accounts, correct errors in past filings, and build structured workflows for ongoing accuracy. Our team creates customized compliance checklists, staff training guides, and documentation templates designed specifically for Quebec businesses.

We also represent clients during audits, reviews, and refund verifications, ensuring that all compliance issues are resolved efficiently and professionally.

REAL CLIENT EXPERIENCE

A construction company misclassified exempt and taxable services, causing under-collected GST/QST. Mackisen corrected their invoicing practices, updated classifications, and filed adjustments to prevent penalties.

A Montreal retailer claimed large ITCs without sufficient documentation. Revenue Québec held their refund until proper evidence was provided. Mackisen rebuilt the documentation and secured the refund.

A self-employed consultant repeatedly filed returns late. Mackisen implemented compliance reminders, a simple monthly reconciliation process, and eliminated missed deadlines entirely.

COMMON QUESTIONS

How do I know if my business is fully compliant
Use this checklist. If multiple sections raise concerns, a compliance review is recommended.

What happens if I am not compliant
You may face interest, penalties, refund delays, or a full audit.

Can I fix past compliance issues
Yes. Adjustments, amended returns, and voluntary disclosures can correct errors.

Should I reconcile tax accounts even if I file annually
Absolutely. Annual filers face the highest risk of cumulative errors.

What industries have the highest compliance risk
Retail, restaurants, construction, e-commerce, digital services, and wellness businesses.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses follow all GST/QST compliance rules through structured systems, detailed reviews, and proactive monitoring. Our expertise keeps your business compliant, audit-ready, and protected from penalties.

93. PRE-AUDIT CHECKLIST: ORGANIZE YOUR GST/QST RECORDS

Preparing your GST/QST records before an audit notice arrives is one of the most effective ways to protect your business from penalties, reassessments, and unnecessary stress. Most businesses do not realize that Revenue Québec audits are primarily documentation-based. If your records are properly organized, accessible, and consistent, the audit process becomes far easier — often ending quickly and favorably. This pre-audit checklist explains how to organize your GST/QST records, so your business is always ready for verification.

A structured pre-audit system prevents scrambling for invoices, reconstructing records, and correcting avoidable mistakes. It also supports accurate reporting and strengthens your financial controls.

LEGAL AND REGULATORY FRAMEWORK

The Excise Tax Act (GST) and the Quebec Taxation Act (QST) require businesses to maintain complete records for at least six years. These records must support all amounts reported on GST/QST returns, including:
• taxable sales
• zero-rated and exempt sales
• GST/QST collected
• input tax credits claimed
• adjustments, returns, and credit notes
• tax calculations and reconciliations

Revenue Québec has authority to inspect books and records, request documentation, and verify transactions. Failure to maintain proper records can result in denied credits, reassessments, and penalties.

KEY COURT DECISIONS

Courts have consistently ruled that taxpayers carry the burden of proof during GST/QST verification. In multiple cases, businesses were denied input tax credits because invoices lacked required details such as GST/QST numbers or clear descriptions of services. Judges also ruled that incomplete documentation, missing receipts, and inconsistent records justify reassessments.

Courts also upheld indirect audit methods — such as bank deposit analysis — when a taxpayer’s records were incomplete. These rulings underscore the importance of having organized, accessible documentation before an audit begins.

WHY CRA AND REVENU QUÉBEC TARGET DISORGANIZED RECORDS

Disorganized GST/QST records are often signs of:
• missing invoices
• unreported sales
• overstated input tax credits
• misclassified transactions
• inconsistent POS reporting
• inadequate bookkeeping
These issues commonly trigger audits or lead to deeper investigation once an audit begins.

Industries with high cash activity, manual invoicing, or frequent small expenses — like retail, restaurants, construction, consultants, wellness clinics, and freelancers — face increased scrutiny.

PRE-AUDIT CHECKLIST: ORGANIZE YOUR GST/QST RECORDS

Follow this checklist to always keep your GST/QST documentation audit ready.

1. Organize sales invoices monthly
   Sort all invoices by month, then by invoice number. Ensure each invoice includes:
   • your GST/QST registration numbers
   • invoice date, customer details, description
   • GST and QST amounts listed separately
   • correct tax rate and coding

2. Keep daily/weekly POS summaries
   Organize Z-reports, end-of-day summaries, online sales reports, and cash register slips. Label each clearly by date.

3. Separate taxable, exempt, and zero-rated sales
   Maintain a schedule showing how each type of supply is classified. This allows auditors to verify tax treatment quickly.

4. Organize supplier invoices for ITCs/ITRs
   Sort invoices by month and supplier. Check that each invoice includes:
   • supplier name and address
   • GST/QST numbers
   • invoice date and number
   • tax breakdown
   Missing or incomplete documents must be replaced with duplicates.

5. Track subcontractor expenses
   In construction and service industries, ensure subcontractor invoices are complete and include tax details. Maintain copies of contracts where needed.

6. Maintain a digital receipt system
   Scan every receipt and invoice into a monthly digital folder. Digital documentation speeds up audits and prevents lost documents.

7. Keep bank statements for each period
   Organize monthly statements chronologically. Mark deposits that are sales versus loans, contributions, or transfers.

8. Reconcile bank deposits to sales records
   Prepare a schedule showing how each deposit corresponds to recorded sales. Explain deposits that are not revenue.

9. Maintain GST/QST control accounts
   Ensure your general ledger includes clear accounts for GST collected, QST collected, and GST/QST paid. Reconcile them monthly.

10. Track credit notes, refunds, and adjustments
    Keep a log of all credit notes issued for returns, discounts, or corrections. Ensure adjustments align with your return filings.

11. Store contracts and agreements
    Maintain a folder for active customer and supplier contracts. Contracts help auditors verify tax treatment, especially for multi-phase projects.

12. Organize capital asset documentation
    Store capital invoices, depreciation schedules, and ITC calculations in a dedicated folder. Auditors often review these high-value items.

13. Maintain payroll-related tax documentation
    If applicable, store:
    • employee reimbursement details
    • taxable allowances
    • subcontractor records
    Some payroll-related expenses affect GST/QST eligibility.

14. Prepare a GST/QST master file for each period
    A complete file should include:
    • sales summary
    • purchase summary
    • bank reconciliation
    • GST/QST reconciliation
    • supporting invoices
    • FPZ-500-V return
    This file becomes your audit binder.

15. Keep all correspondence with tax authorities
    Store letters, emails, notices, and assessments from CRA or Revenue Québec. These documents clarify past positions and prevent repeated errors.

MACKISEN STRATEGY

Mackisen CPA helps businesses create robust pre-audit systems that keep GST/QST records organized all year. We develop filing structures, monthly checklists, digital document systems, and reconciliation workflows so that every return is audit ready. Our team performs pre-audit reviews to identify gaps, missing invoices, or incorrect classifications — and we correct them before an auditor sees your file.

If a business receives an audit notice, Mackisen assembles the complete audit package, communicates with Revenue Québec, and represents the business during the review.

REAL CLIENT EXPERIENCE

A retail store kept all receipts in boxes without organization. When an audit notice arrived, they couldn’t locate documentation. Mackisen categorized years of receipts, rebuilt schedules, and reduced potential penalties significantly.

A self-employed contractor had incomplete subcontractor invoices. Mackisen obtained missing documents, reconciled tax accounts, and created a structured filing system that prevented future issues.

A startup with online sales had inconsistent digital reports from Shopify and their accounting software. Mackisen synchronized the data and created a pre-audit file that passed review smoothly.

COMMON QUESTIONS

Do I need to keep documents for six years
Yes. GST/QST legislation requires six years of documentation from the end of the tax year.

Is digital documentation acceptable
Yes. Revenue Québec accepts properly scanned or digital records.

What if I am missing receipts
Request duplicates immediately. Missing documentation often leads to denied credits.

How early should I prepare for an audit
Always. Pre-audit preparation should be ongoing.

Does organizing my records reduce audit risk
Yes. Well-organized records result in fewer questions and faster closure.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses organize and maintain GST/QST records that are audit-ready year-round. Our proactive systems protect you from penalties, reassessments, and last-minute stress.