GST/QST FAQ: ANSWERS TO 10 COMMON SALES TAX QUESTIONS

Quebec business owners — whether freelancers, startups, contractors, retailers, or e-commerce sellers — often face confusing GST/QST questions. Sales tax rules are detailed, administrative, and unforgiving when mistakes occur. This GST/QST FAQ addresses ten of the most common sales tax questions business owners ask, with clear explanations to help you stay compliant and avoid errors, penalties, or refund delays.

Understanding these fundamentals will make your tax filing smoother, more accurate, and fully aligned with Revenu Québec and CRA requirements.

LEGAL AND REGULATORY FRAMEWORK

Sales tax obligations come from the Excise Tax Act (GST) and the Quebec Taxation Act (QST). These laws require businesses to charge, collect, remit, and report GST/QST on taxable supplies, maintain documentation for six years, and register once they exceed the small supplier threshold.

The rules apply whether you operate physically, online, locally, or across provinces.

KEY COURT DECISIONS

Courts routinely affirm that:
• GST/QST errors remain the responsibility of the business
• missing documentation invalidates input tax credits
• ignorance of the rules is not a defence
• place-of-supply must be determined correctly
• software errors do not excuse incorrect tax collection

These rulings emphasize the importance of understanding foundational GST/QST rules.

WHY BUSINESSES KEEP ASKING THESE QUESTIONS

Because GST/QST rules vary by industry, province, transaction type, and invoicing method, business owners often:
• misinterpret thresholds
• misapply tax rates
• mix personal and business expenses
• misunderstand exempt vs. taxable services
• incorrectly handle interprovincial sales
• lose supporting documents

This FAQ resolves the most frequent points of confusion.

GST/QST FAQ: ANSWERS TO 10 COMMON SALES TAX QUESTIONS

1. Do I need to register for GST/QST?

You must register once your worldwide taxable revenues exceed $30,000 over four consecutive quarters or in a single quarter. Below this level, you are a small supplier — but voluntary registration is often beneficial.

2. Are my products or services taxable?

Most goods and services are taxable unless specifically exempt or zero-rated. Examples:
• taxable: consulting, renovation, design, online products, digital services
• exempt certain health services, residential rents, some education

3. Do I charge GST/QST to customers outside Quebec?

You apply tax based on place-of-supply rules:
• Quebec customers: GST + QST
• HST provinces: HST
• GST-only provinces: GST
• PST provinces: GST + PST (requires PST registration)
• international: often zero-rated

4. Do I need to charge tax on digital sales?

Yes. Digital services (SaaS, subscriptions, downloads) are taxable. Foreign suppliers selling to Quebec customers must comply with QST non-resident rules.

5. Can I claim GST/QST on all my business purchases?

No. You can claim ITCs/ITRs only on eligible expenses supported by valid invoices that include supplier tax numbers and tax amounts. Personal or exempt-use expenses do not qualify.

6. What happens if I filed late?

Penalties and interest apply. Repeated late filings increase audit risk and may delay future refunds.

7. Why is my refund delayed?

Common reasons include:
• missing invoices
• inconsistent sales totals
• high or unusual ITC claims
• incorrect tax coding
• outstanding balances from earlier periods

Revenue Québec may request documentation before issuing refunds.

8. Do I collect GST/QST on deposits?

Yes. Deposits, retainers, and progress payments are taxable when received.

9. Should I use accounting software for GST/QST?

Yes. Accounting software automates tax coding, reduces filing errors, and makes reconciliations easier. Manual systems often result in incorrect tax calculations.

10. Can I be audited for GST/QST?

Yes. Revenue Québec audits businesses frequently — especially those with inconsistent filings, missing documentation, large refunds, or industries with elevated risk.

MACKISEN STRATEGY

Mackisen CPA helps businesses understand and apply GST/QST correctly. We analyze your business model, determine tax treatment, review invoices, configure accounting systems, and ensure full compliance. Our structured training, filing support, and audit defense services protect your business from costly mistakes.

REAL CLIENT EXPERIENCE

A Montreal freelancer didn’t know digital services were taxable. Mackisen registered their GST/QST accounts, updated invoicing, and corrected past filings.

A retailer misapplied GST-only instead of GST+QST for Quebec sales. Mackisen fixed POS coding and prevented an audit adjustment.

A construction business missed thousands in eligible input credits due to missing invoices. Mackisen implemented a documentation system and recovered credits.

COMMON QUESTIONS

Does GST/QST apply to contractors?
Yes. Construction, renovation, and trade services are taxable.

Can I charge tax without registration?
No. This is a compliance violation.

Do small suppliers get audited?
Yes. Especially if their returns show unusual refund claims or inconsistent patterns.

What if I charged the wrong tax?
You may need to issue corrected invoices or file adjustments.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses navigate GST/QST rules accurately and confidently. Our guidance ensures clear, compliant, and stress-free sales tax management.