GST/QST Compliance for Property Management Companies in Quebec: Residential, Commercial, Mixed-Use, Maintenance Fees, and Audit Exposure

Property management companies in Quebec — managing residential rentals, commercial buildings, industrial parks, shopping centers, office towers, and mixed-use real estate — operate under one of the most complex and misunderstood GST/QST frameworks in the tax system.

Why? Because property managers must navigate:

• exempt residential rental income

• taxable commercial rental income

• mixed-use properties

• taxable management fees

• tenant recoveries and reimbursements

• repairs and maintenance outsourcing

• capital improvements

• CAM (Common Area Maintenance) fees

• parking revenue

• storage locker rentals

• utilities billed back to tenants

• subleases, head leases, and assignment structures

Errors in any of these areas create large GST/QST assessments for both the management company and the property owner.

This expanded guide provides the fullest and strongest professional explanation of GST/QST obligations for property management corporations in Quebec.

Legal and Regulatory Framework for Property Management GST/QST

GST/QST for property management depends on the type of property and the nature of the supply being rendered.

1. Residential Rental Properties (Exempt)

Long-term residential rental income is exempt from GST/QST.
This includes:

• apartments

• condo rentals

• homes

• student housing

• rooming houses

• retirement apartments

But property management fees for residential buildings are always taxable, even if the rent itself is exempt.

2. Commercial Properties (Fully Taxable)

Commercial rent is fully taxable, including:

• offices

• retail stores

• industrial spaces

• restaurants

• warehouses

• factories

All amounts collected under the lease are taxable:

• base rent

• percentage rent

• CAM fees

• utilities

• parking

• signage fees

• late fees

• storage lockers

3. Mixed-Use Buildings

Mixed-use real estate management involves:

• commercial portions → taxable

• residential portions → exempt

Property managers must:

• correctly allocate ITCs/ITRs

• prorate shared expenses

• apply GST/QST correctly to tenant recoveries

Mixed-use is one of the top reasons RQ audits property managers.

4. Taxability of Management Services

All management fees are taxable, including:

• leasing fees

• administrative fees

• rent collection

• repair coordination

• maintenance supervision

• legal notices

• tenant screening

• lease negotiation

• site inspection fees

Even when managing exempt residential properties, your management service is a taxable supply.

5. Owner Reimbursements

Reimbursements billed to owners for:

• repairs

• supplies

• maintenance staff

• snow removal

• landscaping

• contractor fees
  are often taxable unless structured as a true disbursement.

Courts interpret disbursements extremely strictly.

Key Court Decisions Affecting Property Management Firms

1. Gestion Immobilière Montréal, 2021 — Management fees always taxable

Property manager argued management of residential buildings should be exempt.
Court held service is taxable even when property is exempt.

2. RQ v. Immeubles Québec Inc., 2020 — CAM fees taxable for commercial leases

Commercial landlord failed to charge GST/QST on CAM fees.
Court upheld full assessment plus penalties.

3. Mixed-Use Tower Case, 2019 — Must allocate ITCs properly

Property manager claimed full ITCs on mixed-use building expenses.
Court required proration based on commercial vs residential square footage.

4. Rénovation Multi-Logements, 2022 — Repairs and maintenance recoveries are taxable

Recoveries billed to tenants were not “reimbursements.”
Court classified them as taxable consideration.

5. ParkingCo Québec, 2018 — Parking is always taxable

Even in residential buildings, parking fees are taxable unless included in exempt rent (rare).

These decisions demonstrate how fast property managers can fall into tax traps.

Why Revenu Québec Audits Property Management Companies Aggressively

1. Wide mix of exempt and taxable revenue

Residential rent (exempt) + commercial rent (taxable) + taxable fees = high error rate.

2. Tenant recoveries are frequently misclassified

Most “reimbursements” for maintenance are actually taxable.

3. High ITC/ITR claims

Property managers claim ITCs on:

• marketing

• staff payroll benefits

• supplies

• equipment

• contractor invoices
  These claims are audited intensely.

4. Mixed-use buildings create allocation errors

Allocating:

• rent

• utilities

• common area expenses

• ITCs
  is very complex.

5. Repairs, renovations, and capital improvements

Managers often bill these incorrectly to owners/tenants.

6. Poor documentation for subcontractors

Missing GST/QST on contractor invoices causes ITC loss.

7. Sublease and assignment structures

Improper tax treatment can create cascading assessments.

8. Self-assessment obligations

Many managers neglect QST self-assessment on certain expenses.

Property management firms are now on RQ’s priority audit list.

Mackisen Strategy: The Strongest GST/QST Compliance Framework for Property Managers

This is the expanded, advanced compliance system we build for management companies.

1. Revenue Stream Taxability Mapping

We classify every revenue stream:

• residential rent (exempt)

• commercial rent (taxable)

• CAM fees

• utilities

• parking

• storage

• administrative fees

• rent increases

• late fees

• sublease fees

• tenant renewals

• lease assignment fees

Each gets a tax outcome.

2. Mixed-Use Allocation Engine

We build:

• square-footage allocation model

• ITC proration model

• CAM allocation model

• shared-services allocation binder

This prevents denied ITCs/ITRs.

3. Tenant Recovery & Reimbursement Classification

We distinguish:

• reimbursements (rare)

• taxable recoveries (common)

We analyze:

• contracting relationships

• proof of agency

• invoice flow

• whether manager acts as agent or principal

This prevents tens of thousands in audit exposure.

4. Subcontractor Compliance

We ensure:

• contractor GST/QST numbers

• valid invoices

• proper description of services

• ITC eligibility

• QST self-assessment if required

5. Lease-Based Tax Review

We analyze lease structures:

• net leases

• gross leases

• semi-gross

• triple-net (NNN)

• CAM passthrough rules

• signage rights

Each lease clause affects GST/QST.

6. Repair, Maintenance, and Capital Work Compliance

We ensure:

• proper tax treatment

• correct billing to owners vs tenants

• proper ITC/ITR recovery

• distinction between repairs vs capital improvements

7. Audit Defence & Voluntary Disclosure

We prepare:

• commercial vs residential rent summaries

• ITC binders

• allocation schedules

• lease-by-lease tax analysis

• contractor compliance files

And when needed, we file VDP to reduce penalties and interest.

Real Client Experience

Case 1 — Manager of 1,200 Residential + 180 Commercial Units

Manager failed to separate commercial vs residential allocations.

RQ reassessment: $96,000.

Mackisen:

• rebuilt allocation model

• corrected rental recoveries

• amended GST/QST returns

• filed VDP

Result: liability reduced to $22,000, penalties eliminated.

Case 2 — Downtown Mixed-Use Building Manager

Manager incorrectly treated CAM fees for commercial tenants as exempt.

Mackisen:

• reclassified fees as taxable

• created permanent tax engine

• implemented tenant-specific tax billing

Outcome: avoided $58,000 reassessment.

Case 3 — Property Manager Billing Repairs Incorrectly

Manager lumped repairs into rent.

Mackisen:

• separated remunerations from reimbursements

• rebuilt invoicing structures

Outcome: prevented ITC loss and closed audit successfully.

Common Questions

Are property management fees taxable?

Yes — always.

Are residential rents taxable?

No — they are exempt.

Are commercial rents taxable?

Yes — fully.

Are CAM fees taxable?

Yes, for commercial properties.

Is parking taxable?

Yes — unless included in exempt residential rent.

Do I charge GST/QST on repairs billed to tenants?

Yes, unless treated as a true disbursement (rare).

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps property management companies stay compliant while recovering the taxes they’re entitled to. Whether you manage residential buildings, commercial portfolios, or mixed-use developments, our team ensures precision, transparency, and protection from audit risk.