How to Claim Input Tax Refunds (ITRs) for QST: A Quick Guide

Introduction
One of the most valuable advantages for Quebec businesses registered for QST is the ability to recover the tax paid on business expenses through Input Tax Refunds (ITRs). These refunds can significantly improve cash flow, but only when claimed correctly and supported with proper documentation.

Many small businesses in Quebec fail to claim all eligible ITRs—or lose them entirely—because of incomplete receipts, missed filing deadlines, or misunderstanding of Revenu Québec’s rules. At Mackisen CPA Montreal, our auditors, accountants, and tax lawyers help ensure that every dollar of refundable QST is recovered while keeping your books fully compliant with Revenu Québec’s audit standards.

Legal and Regulatory Framework
The right to claim Input Tax Refunds (ITRs) is granted under Quebec’s Taxation Act (s. 250 to 259), which mirrors the federal Excise Tax Act (s.169) governing GST Input Tax Credits (ITCs). These provisions allow registered businesses to recover QST paid on purchases and expenses used in the course of their commercial activities.

However, under Tax Administration Act (s. 93) and Excise Tax Act (s. 296), Revenu Québec and CRA have the authority to audit, deny, or reassess ITR claims that lack sufficient proof or are claimed in error.

This means that while claiming ITRs can boost your cash flow, it also requires accurate bookkeeping, documentation, and strict adherence to compliance timelines.

Who Can Claim Input Tax Refunds (ITRs)
You can claim ITRs if your business:

• Is registered for QST (and GST, if applicable).

• Pays QST on goods or services used in taxable commercial activities.

• Has valid supporting documents that meet Revenu Québec’s invoice requirements.

You cannot claim ITRs if the expenses are personal, exempt from QST, or unrelated to your business operations. Examples include personal vehicle expenses, entertainment not related to clients, or costs related to exempt supplies such as residential rent or financial services.

Eligible Expenses for ITRs
Common examples of expenses that qualify for QST Input Tax Refunds include:

• Inventory and resale goods.

• Office supplies and utilities.

• Rent, repairs, and professional fees.

• Software, website hosting, and advertising.

• Business vehicles used exclusively for commercial purposes.

• Equipment and capital assets used for taxable operations.

Each expense must be supported by an invoice showing the supplier’s QST registration number and the amount of tax paid.

Step-by-Step: How to Claim Input Tax Refunds (ITRs) for QST

1. Keep All Supporting Documents

   • Ensure invoices contain: supplier name, QST number, tax amount, and description of goods or services.

   • Save receipts digitally and physically for a minimum of six years.

2. Record Transactions Accurately

   • Enter QST amounts separately in your accounting system (QuickBooks, Sage, or Xero).

   • Reconcile your purchases and tax paid each reporting period.

3. File Through Revenu Québec’s Mon Dossier

   • When filing your FPZ-500-V return, claim the QST paid on eligible business expenses.

   • Ensure your totals align with supplier records.

4. Submit Your Claim on Time

   • You must claim ITRs within four years from the filing deadline of the original return. Late claims are automatically denied.

5. Keep Records Ready for Audit

   • Revenu Québec frequently requests proof of ITRs during audits. Maintain invoices and proof of payment ready for verification.

Jurisprudence and Audit Implications
Several court cases emphasize the importance of documentation and accuracy in ITR claims:

• Canderel Ltd. v. Canada (SCC 1998): Tax returns must reflect commercial reality; unsupported claims can be denied.

• Hickman Motors Ltd. v. Canada (SCC 1997): Assessments are presumed correct until the taxpayer provides evidence to the contrary.

• Vancouver Art Metal Works Ltd. v. Canada (FCA 2015): Input tax credits (and by extension, ITRs) are allowed only when invoices and proof of payment meet legal standards.

In practice, this means if Revenu Québec audits your ITRs and finds incomplete or missing documentation, they can reassess your file and disallow the entire refund—even for legitimate expenses.

Documentation: Building a Strong ITR Claim
To make your claim audit-proof, follow these documentation best practices:

• Keep supplier invoices showing both GST and QST registration numbers.

• Retain bank statements or payment proofs that match each invoice.

• For online purchases, save digital receipts and transaction confirmations.

• Track capital assets separately, as QST on large purchases may be refundable over several periods.

If your claim is denied, you have the right to object under Tax Administration Act s. 93.1 within 90 days of the reassessment. Mackisen CPA can handle the objection process and rebuild the evidence required to support your claim.

How Revenu Québec and CRA Audit ITRs
During a verification, auditors typically:

1. Request invoices for large purchases or recurring expenses.

2. Match invoice data with your accounting system and bank records.

3. Review whether purchases are related to taxable business activity.

4. Deny partial or full ITRs if invoices lack tax registration numbers or appear personal.

A reassessment can include penalties, interest, and suspension of future refunds until the issue is resolved.

Winning With Revenu Québec and CRA
At Mackisen CPA Montreal, we have helped hundreds of businesses successfully defend and recover denied Input Tax Refunds. Our 35+ years of experience and team of CPA auditors, tax lawyers, and accounting professionals enable us to achieve exceptional results through strategy, documentation, and professional representation.

Our Winning Strategy for ITR Claims

1. Claim Verification and Review – We review your expenses, categorize eligible QST-paid purchases, and confirm every supplier’s registration status.

2. Documentation Reconstruction – If receipts or invoices are missing, we rebuild your records using bank and supplier data.

3. Legal Representation – Our tax lawyers handle communication with Revenu Québec and CRA to challenge unfair rejections.

4. Negotiation and Settlement – We leverage your rights under Tax Administration Act s.94.1 and CRA Policy P-148 to reduce or reverse penalties.

5. Compliance Enhancement – We implement systems to prevent future claim losses and ensure faster refund processing.

Mackisen Service Hub: Your Partner in Tax Recovery and Compliance
The Mackisen Service Hub in Montreal specializes in QST and GST recovery for small and medium-sized businesses. Our services include:

• Full review of GST/QST Input Tax Credits and Refunds.

• System setup for automated QST tracking and reconciliation.

• Filing assistance through CRA and Revenu Québec portals.

• Audit defense and penalty relief applications.

Our experts—graduates from McGill University, Université de Montréal, and Concordia University—combine decades of field experience with deep legal understanding to secure optimal results for our clients.

Real Client Example
A Quebec design firm lost $24,000 in denied ITRs after a Revenu Québec audit cited “insufficient documentation.” Mackisen CPA reconstructed all invoices using supplier databases, added missing registration numbers, and filed a detailed objection under Tax Administration Act s.93.1. Within eight weeks, the reassessment was reversed, and the refund was fully approved.

Why Mackisen
With over 35 years of combined CPA and legal expertise, Mackisen CPA Montreal is the trusted firm for QST Input Tax Refund recovery and audit defense. Our team ensures every ITR you claim is legitimate, fully documented, and protected by law—because your refund isn’t just money owed; it’s your right.