How to Avoid Common GST/QST Filing Errors

Introduction
Filing GST and QST returns is a responsibility that every business in Quebec must take seriously. Yet each year, thousands of companies—big and small—make simple mistakes that lead to heavy penalties, lost refunds, or even full-blown tax audits. The good news? Most of these errors are completely avoidable with proper knowledge, documentation, and professional guidance.

At Mackisen CPA Montreal, we have over 35 years of combined CPA and legal experience helping Quebec businesses correct, defend, and prevent GST/QST filing errors. In this detailed guide, we explain the most common filing mistakes, what the law says about them, and how to stay completely compliant while protecting your business from reassessment.

Legal and Regulatory Framework
Your obligation to file accurate GST and QST returns is anchored in both federal and provincial law:

• Excise Tax Act (Canada), s. 228(1) — requires all registrants to file and remit GST accurately and on time.

• Taxation Act (Quebec), s. 407 — requires QST registrants to file periodic returns reflecting true taxable supplies.

• Tax Administration Act (Quebec), s. 59 and s. 94.1 — establish penalties, interest, and relief for late or incorrect filings.

Under Excise Tax Act s. 280(1), interest compounds daily on unpaid GST balances. Revenu Québec applies a similar compounding mechanism for QST under Tax Administration Act s. 59(3). Even small errors can grow into serious liabilities if not corrected promptly.

The Most Common GST/QST Filing Errors

1. Forgetting to Register After Passing $30,000 in Sales
   Businesses must register for GST and QST once annual taxable sales exceed $30,000. Failing to do so results in uncollected taxes that Revenu Québec can later assess retroactively.

2. Incorrect Tax Calculation (Charging GST Only)
   Many Quebec sellers forget that the province requires both GST (5%) and QST (9.975%). If you charge only one, you owe the other out of pocket.

3. Claiming Input Tax Credits (ITCs) or Input Tax Refunds (ITRs) Without Valid Invoices
   CRA and Revenu Québec deny credits unless invoices include the supplier’s legal name, registration number, and tax amounts.

4. Using the Wrong Reporting Period
   Filing the wrong month or quarter can trigger system errors and create duplicate assessments.

5. Ignoring “Nil” Filing Requirements
   Even if you have no sales, you must file a zero return. Missing filings create compliance flags and may lead to audits.

6. Incorrectly Recording Sales and Expenses
   Misclassifying taxable versus exempt supplies—like professional services versus residential rent—creates mismatched totals that alert auditors.

Step-by-Step: How to Prevent GST/QST Filing Errors

1. Register on Time and Confirm Your Numbers
   Register with CRA and Revenu Québec immediately when approaching $30,000 in sales. Double-check registration confirmations before charging taxes.

2. Use Accounting Software with Automatic Tax Codes
   Programs like QuickBooks, Xero, or Sage calculate GST and QST automatically, reducing manual errors.

3. Reconcile Monthly
   Match tax collected versus tax remitted to detect missing or double-counted transactions.

4. Validate Supplier Registration Numbers
   Before claiming ITCs or ITRs, confirm suppliers’ GST/QST registration through CRA and Revenu Québec databases.

5. Perform Quarterly Compliance Reviews
   A CPA pre-filing audit detects data entry errors and ensures accurate remittances.

6. Maintain Up-to-Date Filing Calendars
   Late filings generate automatic penalty assessments—even if you owe nothing.

Jurisprudence and Key Legal Insights
The courts have repeatedly ruled that tax authorities are entitled to full accuracy from registrants:

• Canderel Ltd. v. Canada (SCC 1998) — tax returns must reflect commercial reality, not assumptions.

• Hickman Motors Ltd. v. Canada (SCC 1997) — CRA assessments are presumed correct; taxpayers bear the burden of proof to correct them.

• Lac d’Amiante du Québec Ltée (SCC 2001) — Revenu Québec’s authority to verify and reassess filings is legally valid and broad.

These decisions make clear that “I didn’t know” is not an acceptable defense. Precision and recordkeeping are the only true protections.

Documentation: Your Best Defense Against Filing Errors
Good documentation is the difference between compliance and chaos. Businesses should maintain:

• All invoices with supplier GST/QST numbers.

• Bank statements matching deposits to declared sales.

• Expense reports and receipts with tax breakdowns.

• Monthly and annual reconciliations showing taxes collected vs. remitted.

• Proof of payment for all GST/QST remittances.

At Mackisen CPA Montreal, we build a permanent electronic compliance binder for every client. Each return, invoice, and tax payment confirmation is catalogued and stored securely for six years—ready in case of a CRA or Revenu Québec audit.

How CRA and Revenu Québec Identify Filing Errors
Both agencies use automated cross-referencing systems to detect errors:

1. CRA compares GST returns to income tax filings and supplier data.

2. Revenu Québec cross-checks QST returns with banking and merchant processor data.

3. When discrepancies arise, you receive a “Verification Letter” or “Request for Information.”

If the difference remains unexplained, they issue a Notice of Reassessment under Excise Tax Act s. 296 or Tax Administration Act s. 93.

Winning With CRA and Revenu Québec
Avoiding errors is better than correcting them—but if mistakes occur, winning requires transparency and strategy.

At Mackisen CPA Montreal, our approach to resolving GST/QST errors is simple yet effective:

• Review every filing and rebuild missing documentation.

• File voluntary corrections before an audit notice is issued.

• Present clean, reconciled proof during verification.

• Negotiate penalty relief under Tax Administration Act s.94.1 and CRA Policy P-148.

Our team of CPA auditors and tax lawyers specializes in identifying weaknesses before tax authorities do—saving clients from reassessments and preserving refunds.

Mackisen Service Hub: Compliance That Never Fails
Our Mackisen Service Hub is Montreal’s dedicated filing accuracy unit. We offer:

• Monthly or quarterly GST/QST filing services.

• Reconciliation audits and compliance monitoring.

• Staff training for invoicing and tax documentation.

• Direct communication with CRA and Revenu Québec on your behalf.

Each specialist in our hub—CPA auditor, tax lawyer, or bookkeeper—is a graduate of McGill University, Université de Montréal, or Concordia University and has handled hundreds of successful tax filings.

Real Client Example
A Montreal IT consultant overclaimed $12,000 in Input Tax Credits due to an accounting import error. CRA issued a reassessment with interest. Mackisen CPA reconstructed the ledger, resubmitted verified claims, and demonstrated that the error was unintentional. CRA reversed all penalties under Policy P-148, and the client received a $2,400 refund adjustment.

Why Mackisen
With more than 35 years of combined CPA and legal experience, Mackisen CPA Montreal is your partner in precision filing and compliance. We don’t just fix GST/QST errors—we prevent them from happening.

Our firm ensures that every invoice, return, and payment is legally correct, fully documented, and defended with professional expertise. When you work with Mackisen, you file once—and file right.