GST/QST Rules for Restaurants, Cafés, and Food Service Businesses in Quebec: Sales Tax on Meals, Tips, Delivery, and Catering

Introduction

Restaurants, cafés, food trucks, bakeries, caterers, and delivery-based food businesses in Quebec deal with some of the most complex and heavily audited GST/QST rules.
Because food service involves multiple revenue streams — dine-in, takeout, delivery apps, catering, alcohol, and tips — it is easy to apply the wrong tax rate or misreport taxable sales.
Revenu Québec aggressively audits the food industry due to cash transactions, high staff turnover, tipping issues, and POS system inconsistencies.
This guide explains how GST/QST applies to meals, beverages, delivery charges, catering, and tips so restaurant owners can stay compliant.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and Quebec Taxation Act (QSTA):

• Most prepared food and beverages are taxable at full GST (5%) and QST (9.975%).

• Zero-rating applies only to specific basic groceries that meet statutory definitions (not restaurant meals).

• Alcohol is fully taxable regardless of service type.

• Delivery fees, service charges, and certain mandatory fees are taxable.

• Tips added automatically (gratuity/service fee) are taxable; voluntary tips are not.

• Catering is taxable unless an exemption applies.

• Restaurants must remit tax on sales even if customers do not pay (voids, unrecorded tips, or cash discrepancies).

Authorities enforce:

• ETA s.165/QSTA s.16 (taxable supplies)

• ETA s.221/QSTA s.22 (collection and remittance)

• ETA s.169(4)/QSTA s.39 (supporting documentation)

• ETA s.286/QSTA s.24 (record-keeping)

Key Court Decisions

Courts have ruled that:

• Restaurant meals are taxable even when consumed off-premises.

• Delivery charges form part of the taxable supply.

• Mandatory service charges are taxable, but voluntary tips are not.

• Unsuitable POS programming does not excuse incorrect GST/QST calculations.

• Restaurants must keep complete daily sales summaries to support tax filings.

• Cash discrepancies and missing records justify reassessment.

These rulings confirm strict enforcement of restaurant GST/QST obligations.

Why CRA and Revenu Québec Target These Issues

Food service is a top audit priority because:

• Cash transactions create risks of underreported sales.

• Delivery platforms (Uber Eats, DoorDash, Skip) complicate revenue reporting.

• POS systems may miscalculate tax on combos, alcohol, or meal deals.

• Employee meal deductions and discounts are often misapplied.

• Mandatory tips are often encoded incorrectly as exempt.

• Alcohol inventory discrepancies trigger audits.

• Catering and banquet fees are sometimes under-reported.

Industries targeted include restaurants, cafés, food trucks, bakeries, caterers, bars, and quick-service restaurants.

Mackisen Strategy

We help food service businesses maintain full GST/QST compliance and avoid costly assessments.

1. POS & Menu Tax Review

We audit your system to ensure:

• Correct GST/QST settings

• Proper treatment of combos

• Alcohol vs non-alcohol coding

• Delivery and takeout tax logic

• Mandatory service fee calculations

2. Delivery Platform Reconciliation

We reconcile:

• Uber Eats

• DoorDash

• SkipTheDishes

• Fantuan

• In-house delivery systems

3. Tips, Service Charges & Staff Meals

We categorize:

• Voluntary tips

• Mandatory service charges (taxable)

• Staff meal policies

• Gratuity distribution documentation

4. Catering & Event Billing

We verify:

• Taxable vs exempt components

• Equipment rental charges

• Fees for servers, bartenders, and setup

• Invoicing compliance

5. Audit Defence

We prepare:

• Daily sales summaries

• Till reports

• Platform statements

• Reconciliation files

• Legal argumentation referencing ETA/QSTA

Real Client Experience

A Montreal café used an outdated POS system that incorrectly charged GST/QST on certain takeout items but not others.
Revenu Québec reassessed over $12,000 in unpaid tax.
Mackisen recalculated taxable sales, corrected POS settings, and negotiated a reduced assessment based on system errors and corrective action.
This case shows how technical errors can create significant tax liabilities.

Common Questions

1. Are all restaurant meals taxable?
Yes — prepared food is fully taxable.

2. Are delivery fees taxable?
Yes, including third-party delivery platform fees.

3. Are tips taxable?
Mandatory tips are taxable; voluntary tips are not.

4. How should alcohol be treated?
Alcohol is always fully taxable.

5. Are catering services taxable?
Yes — unless a statutory exemption applies (rare).

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps restaurant owners, cafés, and food service businesses stay compliant while recovering the taxes they’re entitled to. Whether you run a small café or a multi-location restaurant, our expert team ensures accuracy, transparency, and protection from audit risk.

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GST/QST rules for restaurants, cafés, and caterers in Quebec — learn how tax applies to meals, delivery, alcohol, catering, and tips, and how to avoid Revenu Québec reassessments.