Insights
Nov 12, 2025
Mackisen
How to Avoid a Cash Flow Crunch at GST/QST Remittance Time — Montreal CPA Firm Near You
Introduction
For many small and medium-sized Quebec businesses, GST (Goods and Services Tax) and QST (Quebec Sales Tax) remittance time can create serious cash flow stress. Even though these taxes are collected from customers, many business owners mistakenly treat the funds as part of their operating income only to realize later that they owe thousands to Revenu Québec and the Canada Revenue Agency (CRA).
At Mackisen CPA Montreal, we help entrepreneurs plan, forecast, and manage their cash flow so GST/QST payments are never a surprise. This guide explains how to anticipate tax remittances, prevent shortfalls, and maintain healthy working capital year-round all while staying compliant with CRA and Revenu Québec.
Legal and Regulatory Framework
Businesses registered for GST and QST are required by law to act as tax trustees on behalf of the government:
Excise Tax Act (Canada) s.225–s.228 — mandates periodic GST/HST returns and remittances.
Taxation Act (Quebec) s.407 — requires QST registrants to remit collected taxes within prescribed periods.
Tax Administration Act (Quebec) s.59(3) — imposes daily compounding interest on unpaid balances.
Excise Tax Act s.280(1) — establishes penalties and interest for delayed GST/HST payments.
Failing to remit collected taxes is a serious compliance issue and can result in director liability, frozen bank accounts, and even criminal prosecution in extreme cases.
1. Understand the Nature of GST/QST Funds
GST and QST are not your money — they belong to the government. Businesses act as intermediaries:
You collect GST/QST from customers.
You deduct Input Tax Credits (ITCs) and Input Tax Refunds (ITRs) for taxes paid on expenses.
You remit the net balance to CRA and Revenu Québec.
Key takeaway: Treat collected GST/QST as a trust fund, not as operating cash.
2. Set Up a Separate “Tax Holding Account”
Open a dedicated business bank account exclusively for tax collections.
Each time you receive a payment that includes GST/QST, transfer the tax portion immediately to this account.
By the time filing is due, the full amount will be ready for remittance.
Example:
If you collect $1,000 in sales with 14.975% GST/QST, transfer $149.75 into your “Tax Holding” account.
Pro Tip: Automate the transfer by setting up a rule in your banking app or accounting software.
3. Forecast Tax Liabilities Monthly
Don’t wait until the end of the quarter to calculate how much you owe.
Instead:
Run monthly reports in your accounting system showing GST/QST collected and GST/QST paid.
Subtract ITCs/ITRs from total taxes collected to estimate the upcoming payment.
Use this number in your cash flow forecast.
Excel Formula Example:
This gives you the net tax payable for that month.
At Mackisen CPA Montreal, we build dynamic Excel and QuickBooks dashboards that automatically calculate GST/QST liability every month.
4. Align Your Payment Cycle With Your Filing Frequency
CRA and Revenu Québec typically assign filing frequencies based on your sales:
Monthly: For businesses earning over $6M annually.
Quarterly: For most small and mid-sized businesses.
Annually: For businesses under $1.5M in revenue.
To prevent surprises:
Set aside 1/12 (monthly) or 1/3 (quarterly) of your expected tax liability each period.
Consider making voluntary prepayments if you expect large seasonal fluctuations.
Example:
If your average quarterly remittance is $9,000, set aside $3,000/month in your tax account.
5. Use Accounting Automation Tools
Leverage technology to monitor taxes in real time:
QuickBooks Online: Use the “Sales Tax” report for automatic GST/QST tracking.
Xero / Sage: Set alerts for tax liabilities and filing deadlines.
Wave / Excel: Create custom dashboards showing daily tax accruals.
Automation helps prevent underestimation and ensures funds are available when filing time comes.
6. Monitor Large Projects and Seasonal Sales Peaks
For construction firms, retailers, or seasonal operators, sales volume can vary drastically.
During high-revenue months, increase your tax reserve proportionally.
Avoid using collected GST/QST for payroll or supplier payments, even temporarily.
After slow months, review whether you over-reserved funds and adjust accordingly.
Pro Tip: When issuing progress invoices on long-term contracts, calculate and isolate the GST/QST portion right away.
7. Claim ITCs and ITRs Correctly to Reduce Liability
To minimize the net tax payable:
Ensure every eligible business expense invoice includes the supplier’s GST/QST registration number.
Record all business-related purchases immediately.
Review partial or restricted credits (e.g., meals, vehicles) to avoid disallowance.
Well-documented ITC/ITR claims can reduce your remittance significantly and improve cash flow predictability.
8. Apply for Payment Extensions or Installment Relief if Needed
If your business faces a genuine short-term cash flow crunch:
Contact Revenu Québec (1-800-567-4692) or CRA (1-800-959-5525) before the due date.
Request a payment arrangement to split your balance into manageable installments.
Under Tax Administration Act s.94.1 and CRA Policy P-148, penalties and interest relief may apply if you act proactively and show financial hardship.
Important: Payment extensions are discretionary — they’re easier to obtain when you demonstrate cooperation and financial transparency.
Jurisprudence and Legal Insights
Courts have consistently emphasized that taxes collected from customers belong to the government, not the business:
Hickman Motors Ltd. v. Canada (SCC 1997) — confirmed that collected GST is deemed held “in trust” for the Crown.
Canderel Ltd. v. Canada (SCC 1998) — filings must reflect actual commercial reality, including remittance obligations.
Lac d’Amiante du Québec Ltée (SCC 2001) — Revenu Québec can impose penalties and interest even if shortfalls result from poor cash management.
The message is clear: lack of planning is not a valid defense for failing to remit taxes on time.
9. Keep a Tax Calendar and Reminders
Add all CRA and Revenu Québec deadlines to your calendar:
Quarterly filers: Returns due one month after the end of each quarter.
Annual filers: Returns due three months after year-end (for corporations).
Set recurring reminders for both filing and payment deadlines in your phone, email, or project management system.
At Mackisen CPA Montreal, we sync our clients’ filing dates with our internal compliance software to ensure no due date is missed.
Documentation: Maintaining Audit-Ready Records
To stay compliant and prepared, maintain:
Separate GST/QST payable and receivable ledgers.
Bank statements showing tax transfers and payments.
Monthly reconciliation reports for taxes collected vs. paid.
Proof of remittance or refund confirmations.
During an audit, Revenu Québec will request these to confirm accurate remittance timing and amounts.
Winning With CRA and Revenu Québec
At Mackisen CPA Montreal, our proactive approach ensures your remittance cycle never disrupts your operations:
Cash Flow Forecasting – We project your GST/QST obligations and incorporate them into monthly budgets.
Automated Reserve Systems – We configure your accounting software to automatically track and reserve tax funds.
Reconciliation Support – We verify your GST/QST accounts each month to prevent filing discrepancies.
Penalty Relief Assistance – If issues arise, our tax lawyers file requests for interest and penalty relief under s.94.1 or CRA Policy P-148.
Mackisen Service Hub: Cash Flow & Tax Management Solutions
Our Mackisen Service Hub provides end-to-end solutions to manage your tax payments and cash flow effectively:
GST/QST forecasting dashboards.
Monthly reconciliation and reporting.
Automated reminders and payment scheduling.
Audit-proof documentation tracking.
Our bilingual CPA auditors and tax lawyers trained at McGill, Université de Montréal, and Concordia University deliver hands-on guidance to keep your finances stable and compliant.
Real Client Example
A Montreal design firm used collected QST to cover payroll, leaving a $42,000 shortfall at remittance time. Mackisen CPA created a monthly tax-holding plan, automated transfers, and restructured their pricing model. Within six months, the firm eliminated cash flow stress and maintained perfect tax compliance.
Why Mackisen
With more than 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures your business is always prepared for GST/QST payments. We transform tax remittance from a last-minute burden into a predictable, controlled process that protects your cash flow and peace of mind.
When you plan with Mackisen, remittance day becomes just another day organized, compliant, and financially secure.
