Insights
Nov 11, 2025
Mackisen
How to Charge GST/QST for Services vs. Goods: What’s the Difference?
Introduction
Whether you’re selling physical products or professional services in Quebec, it’s crucial to understand how GST (Goods and Services Tax) and QST (Quebec Sales Tax) apply differently. While both taxes use the same rates — 5% for GST and 9.975% for QST — the rules for charging, invoicing, and remitting can vary depending on whether you sell goods, services, or both.
This detailed guide from Mackisen CPA Montreal explains how to charge GST/QST correctly for services vs. goods, when exemptions apply, and how to avoid the common mistakes that lead to costly reassessments or denied input tax credits.
Legal and Regulatory Framework
The sale of goods and services in Quebec is governed by:
Excise Tax Act (R.S.C. 1985, c. E-15) — federal GST law.
Quebec Sales Tax Act (R.S.Q., c. T-0.1) — provincial QST law.
Under both acts, GST and QST apply to most taxable supplies of goods and services made in Quebec. However, determining whether a transaction is a “good” or a “service” affects how and where the taxes are applied — particularly for cross-border, online, or mixed transactions.
Learning Insight
Understanding the distinction between goods (tangible items) and services (intangible work or expertise) is vital. It influences where taxes apply, how invoices are structured, and who bears the collection responsibility.
Step-by-Step: How to Charge GST/QST on Goods vs. Services
Step 1 — Define What You’re Selling
Goods:
Tangible, physical products such as merchandise, machinery, or retail items. The point of taxation depends on where the goods are delivered.
Services:
Intangible work — consulting, accounting, marketing, web design, etc. The point of taxation depends on where the service is performed or used.
Example:
Selling skincare products in-store → taxable as goods.
Providing a marketing consultation by Zoom → taxable as a service.
Step 2 — Know When to Charge GST/QST
Type of Sale | GST (5%) | QST (9.975%) | Notes |
|---|---|---|---|
Goods sold/delivered in Quebec | Yes | Yes | Charge both taxes |
Goods sold to other Canadian provinces | Yes or HST | No | Apply buyer’s provincial rate |
Goods exported outside Canada | No | No | Zero-rated export |
Services performed for Quebec clients | Yes | Yes | Standard taxation |
Services for clients outside Quebec but in Canada | Yes | No | GST/HST applies based on client’s province |
Services for clients outside Canada | No | No | Zero-rated (exported service) |
Learning Insight
For goods, the delivery location determines taxation.
For services, the client’s place of use or benefit determines which taxes apply.
Step 3 — Apply Taxes Correctly
A. For Goods:
Calculate GST (5%) on the pre-tax selling price.
Calculate QST (9.975%) on the subtotal (price + GST).
Show both tax amounts separately on invoices.
Example:
Product price: $100
GST (5%): $5
QST (9.975% × $105): $10.48
Total: $115.48
B. For Services:
Apply the same tax rates, but determine based on the location of the client:
If your client is in Quebec → charge both GST and QST.
If in another province → charge GST or HST only (no QST).
If outside Canada → do not charge GST/QST (zero-rated).
Example (Consulting Service to a Quebec Client):
Service fee: $200
GST (5%): $10
QST (9.975% × $210): $20.95
Total: $230.95
Step 4 — Handle Mixed Sales (Goods + Services)
If you sell both goods and services together — for example, installing equipment or creating custom products — determine which element is dominant:
If the main value is the product, treat as a sale of goods.
If the main value is your labor/expertise, treat as a service.
Example:
A home renovation contract includes materials and installation. If materials represent 70% of the bill, QST/GST apply as a sale of goods.
Learning Insight
Mixed transactions must be categorized properly. CRA and Revenu Québec audits often reclassify invoices when the wrong tax treatment is applied.
Step 5 — Invoice and Record Properly
Your invoice should clearly show:
Description of product or service.
Price before tax.
GST (5%) amount.
QST (9.975%) amount.
Total amount due.
GST and QST registration numbers.
Example:
GST No. 123456789 RT0001
QST No. 123456789 TQ0001
If you invoice customers outside Quebec, include notes such as:
“Tax-exempt export – goods delivered outside Quebec/Canada.”
Common Errors to Avoid
Charging QST on goods delivered outside Quebec.
Forgetting to apply QST on services provided to Quebec clients.
Applying GST/QST on exempt activities (financial, medical, educational).
Not specifying whether the sale is for goods or services on invoices.
Misclassifying online or digital services (e.g., subscriptions).
Learning Insight
Auditors often focus on cross-border sales and service exports. Document where the product or service was delivered, used, or consumed.
Real Quebec Business Example
A Montreal web designer charged QST on services provided to U.S. clients — incorrectly, since exported services are zero-rated. After amending the return, Mackisen CPA recovered $3,200 in overpaid QST.
Conversely, a local electronics store forgot to charge QST on goods shipped within Quebec, resulting in $5,000 in reassessed taxes.
Lesson: Always determine where your customer is and what you’re selling before applying taxes.
Compliance Checklist
Do
Identify whether you’re selling goods or services for every transaction.
Charge GST/QST based on the location of delivery or benefit.
Use proper invoice descriptions and tax numbers.
Keep records of cross-province and export transactions.
Review your invoices quarterly for tax accuracy.
Don’t
Assume the same tax rules apply to all clients.
Charge QST on exports or clients outside Quebec.
Apply taxes without confirming registration.
Ignore mixed or bundled sales tax treatment.
Mackisen Strategy
At Mackisen CPA Montreal, we help businesses correctly apply GST and QST across goods, services, and hybrid transactions. We:
Analyze your sales structure to classify goods vs. services accurately.
Configure invoicing systems for automatic tax calculation.
File returns with proper tax treatment for cross-border sales.
Provide audit-proof documentation and reporting.
With Mackisen CPA, your invoices are always compliant — and your business protected.
Why Mackisen
With over 35 years of combined CPA expertise, Mackisen CPA Montreal helps Quebec businesses navigate complex GST/QST rules with confidence. Whether you sell products, services, or both, our team ensures accurate tax treatment, compliance, and peace of mind.
