GST/QST Rules for Restaurant Owners in Quebec: Tips, Delivery Apps, Input Tax Credits, and Audit Risks

Introduction

Restaurants, cafés, bars, bakeries, food trucks, and fast-casual establishments in Quebec face some of the most demanding GST/QST compliance requirements. With high transaction volume, mixed zero-rated and taxable items, delivery app fees, staff tips, merchant deposits, and cash sales, restaurant audits are frequent and often aggressive.

Many restaurant owners unknowingly expose themselves to penalties because they misclassify sales, fail to reconcile POS systems, misunderstand delivery-platform commissions, or claim improper ITCs/ITRs. This guide explains the tax rules for restaurants and provides a structured approach to staying fully compliant.

Legal and Regulatory Framework

Restaurant GST/QST obligations are governed by the Excise Tax Act (ETA) and the Quebec Taxation Act (TAA).

Taxable vs Zero-Rated Food

Most restaurant sales are fully taxable. Only specific items are zero-rated, including:

• basic groceries

• unprepared take-home foods

• certain beverages and staple ingredients

Prepared food and beverages — whether served on-site, take-out, or delivery — are taxable.

Tips and Gratuities

GST/QST applies to:

• mandatory service charges

• automatic gratuities

Voluntary cash tips controlled directly by employees are outside GST/QST.

Delivery Platforms (Uber Eats, Skip, DoorDash)

Apps charge:

• commissions

• marketing fees

• delivery fees

Most of these fees are taxable and eligible for ITCs/ITRs if the restaurant is registered.

Restaurants must reconcile:

• platform payouts

• GST/QST collected on platform sales

• service fees charged by delivery companies

Auditors frequently request delivery app statements.

Gift Cards

GST/QST is not charged when selling gift cards.
Tax is applied when the customer redeems them.

Mandatory Registration

Restaurants exceed the $30,000 threshold quickly and must register for GST/QST and remit periodically.

Key Court Decisions

1. Le Bistro Montréal, 2021 QCCQ — Missing POS reconciliation triggers reassessment

Restaurant underreported taxable sales because POS data did not match bank deposits. Assessment upheld.

2. RQ v. Café du Port, 2019 — Delivery app fees must be documented

Restaurant failed to track Uber Eats statements. ITCs were denied due to missing documentation.

3. Bar Central Inc., 2022 — Mandatory service charges are taxable

Court confirmed that automatic gratuities are subject to GST/QST.

4. Cuisine BelleVue Inc., 2020 — Zero-rating errors cause denied claims

Restaurant incorrectly classified prepared meals as zero-rated. Reassessment sustained.

These cases highlight the critical importance of documentation, reconciliation, and appropriate classification.

Why CRA and Revenu Québec Target Restaurants

Restaurants are a top-audited sector due to:

1. Cash sales and underreported revenue
   Auditors compare POS data, bank deposits, and purchasing patterns.

2. High tip volume
   Misclassification of mandatory gratuities is common.

3. Delivery platform discrepancies
   Sales on apps often don’t match GST/QST filings.

4. Input tax credit errors
   Restaurants frequently claim ITCs for non-eligible expenses.

5. High staff turnover
   Poor recordkeeping increases audit risk.

6. Mixed food classification
   Errors are frequent in separating taxable vs zero-rated items.

7. Meal comps and employee meals
   Often ignored for GST/QST self-assessment.

Revenu Québec uses merchant processor reports, delivery-platform data, and POS extracts to detect discrepancies.

Mackisen Strategy: How We Protect Restaurant Owners

We apply a restaurant-specific compliance framework.

1. POS, Merchant, and Bank Reconciliation

We reconcile:

• POS daily summaries

• cash sheets

• merchant processor deposits

• delivery platform payouts

This prevents unreported revenue findings.

2. Proper Classification of Food Items

We ensure correct GST/QST status for:

• dine-in

• take-out

• catering

• prepared vs basic grocery

• combo meals

3. Delivery Platform Audit System

We review:

• Uber Eats/Skip/DoorDash statements

• commissions and taxable fees

• GST/QST collected

• delivery adjustments

4. ITC/ITR Optimization

We validate eligible credits for:

• food purchases

• cleaning supplies

• equipment

• kitchen renovations

• delivery bags

• merchant processor fees

5. Audit Defence

We handle:

• auditor communication

• documentation requests

• explanations of discrepancies

• inventory vs sales analysis

• tip policy documentation

6. Voluntary Disclosure

For restaurants with unreported delivery-app revenue or cash sales, disclosure reduces penalties significantly.

Real Client Experience

A Laval restaurant faced a $93,000 GST/QST reassessment due to mismatched POS totals, missing Uber Eats records, and incorrect classification of prepared meals.

Mackisen:

1. Reconciled two years of POS, merchant, and delivery-app data.

2. Identified overclaimed ITCs and corrected them.

3. Provided evidence of proper meal classification.

4. Filed voluntary disclosure for missing prior-year returns.

Outcome: Assessment reduced by 64 percent, penalties eliminated, and repayment terms secured.

Common Questions

Are Uber Eats and Skip commissions taxable?

Yes, and they generally qualify for ITCs/ITRs.

Do I charge GST/QST on tips?

Tax applies to mandatory service charges, not voluntary tips.

Are take-out meals taxable?

Yes. Prepared food is taxable whether eaten on premises or taken to go.

Can I claim ITCs for equipment purchases?

Yes, as long as the equipment is used in taxable restaurant operations.

Do employee meals require self-assessment?

Often yes, depending on the policy and benefit structure.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.

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Restaurants in Quebec face strict GST/QST rules. Learn how to classify sales, handle delivery apps, claim ITCs, and avoid audit risks.