How to De-Register for GST/QST When Closing a Business — A Montreal CPA Firm

Closing a business in Quebec is not as simple as shutting the doors and stopping operations. From a GST/QST perspective, closing a business is one of the most dangerous compliance events an entrepreneur will ever face. Too many owners believe they can simply “stop collecting tax” and walk away. They don’t realize that Revenue Québec and the CRA automatically perform a GST/QST compliance review the moment a business attempts to de-register—and any errors discovered can lead to penalties, trust-fund investigations, or large reassessments.
When you de-register incorrectly, you risk owing GST/QST on remaining inventory, capital assets, supplies still on hand, unfiled periods, unremitted trust funds, and prior-year discrepancies. Your refunds may be frozen. Your file may be escalated for audit. Your business may remain legally active even after it is closed.
As a Montreal CPA firm with more than 35 years of combined professional experience, Mackisen CPA Montréal created this complete GST/QST de-registration guide to protect you from the financial dangers that occur when a business closes.

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Why This Matters

Most businesses closing in Quebec make expensive mistakes because they do not know the legal obligations tied to GST/QST de-registration. The most common risks include
• unfiled GST/QST returns from earlier periods
• unremitted GST/QST trust funds
• owing tax on remaining inventory
• owing tax on capital assets still owned at closing
• failing to remit tax on deemed supplies
• ignoring CRA or RQ portal notices
• missing documentation
• submitting the deregistration request too early or too late
• misunderstandings about the $30,000 small-supplier rule
• incorrect final FPZ-500-V filing
These errors lead directly to penalties, reassessments, refund holds, payment demands, multi-year audits, and legal consequences.
You cannot legally close a business until GST/QST is settled cleanly.

Legal and Regulatory Framework

Closing a business triggers specific GST/QST obligations under
• the Excise Tax Act
• the Quebec Sales Tax Act
• the Tax Administration Act
• CRA and Revenue Québec administrative policy
De-registration requires filing final returns, remitting trust funds, reporting “deemed supplies,” and providing proper documentation.
Courts have consistently upheld strict consequences for incorrect de-registration.
Lac d’Amiante confirmed that incomplete documentation justifies reassessment.
Prokofiew established that taxpayers must prove all credits and classifications.
Aikman reinforced that invoices and records must meet exact legal standards.
Global Cash Access authorized tax authorities to reconstruct transactions where books were poor.
These cases show that Revenue Québec expects perfect records—even at closure.

GST/QST Are Trust Funds — De-Registration Errors Create Immediate Personal Exposure

GST and QST collected from customers are trust funds. When closing a business, Revenue Québec checks whether you are holding any trust money that should have been remitted. If you are, they treat this as non-remittance, even if the business is shutting down.
Trust-fund discrepancies during closure can lead to
• frozen bank accounts
• garnishments
• liens
• denial of your de-registration request
• seizure of GST/QST refunds
• penalties and interest
• director personal liability
You must settle trust obligations before your business can legally close.

The Mackisen GST/QST De-Registration Compliance Checklist

1. File ALL Outstanding GST/QST Returns Before Requesting De-Registration

Revenue Québec will not close your GST/QST account if
• a single period is missing
• a return was filed incorrectly
• an adjustment is pending
• a refund is under review
You must file every period—even NIL returns.

2. Remit All GST/QST Trust Funds Owed Immediately

Before de-registration, you must reconcile
• GST/QST collected
• GST/QST payable
• past credits
• trust-fund balances
Revenue Québec performs its own calculation. Any discrepancy delays closure.

3. Report “Deemed Supplies” on Remaining Inventory and Assets

When you close a business, the law treats remaining assets as if you sold them to yourself at fair market value. You must remit GST/QST on
• inventory
• equipment
• machinery
• tools
• computers
• furniture
• supplies
• digital assets
• capital property
Failing to account for deemed supplies is a major audit trigger.

4. Cancel All Tax-Related Activities Before Closing Your Account

This includes
• stopping taxable sales
• updating invoicing systems
• disabling tax codes in POS
• ending subscription or automated billing
• notifying customers
If you continue issuing invoices with GST/QST, you cannot deregister.

5. Submit a Final FPZ-500-V Return with All Adjustments

Your final GST/QST return must include
• sales to date
• GST/QST collected
• final ITCs/ITRs
• deemed supply calculations
• adjustments and credit note
This filing is heavily scrutinized.

6. Request De-Registration Through CRA and Revenue Québec Portals

You must cancel
• GST/HST account through CRA
• QST account through Revenue Québec
Both agencies communicate with each other. Missing one causes discrepancies.

7. Maintain All Documentation for Six Years After Closure

You must keep
• invoices
• receipts
• bank statements
• contracts
• FPZ-500-V returns
• cancellation confirmations
• trust-fund records
• asset lists and valuations
Auditors can review closed businesses. Closure does not eliminate liability.

8. Respond Immediately to Any CRA or RQ Requests

Closure often triggers
• RFIs
• verification letters
• requests for invoices
• requests for inventory lists
• reconciliation demands
Ignoring these leads to reassessment and delayed closure.

Recent Trends: Increased Enforcement for Business Closures

Revenue Québec now uses
• electronic invoice matching
• automatic detection of unfiled periods
• bank deposit matching
• beneficial ownership verification
• risk-scoring for businesses requesting de-registration
• POS extraction audits
Businesses attempting to deregister incorrectly are flagged immediately.

Benefits of Proper GST/QST De-Registration

Correct de-registration ensures
• clean closure with no debt
• no trust-fund exposure
• no penalties or interest
• no audit escalation
• no frozen refunds
• immediate account termination
• proper legal protection for directors
• peace of mind after years in business
This step protects you from future problems.

Compliance Requirements When Closing a Business

You must
• reconcile trust funds
• file all returns
• report deemed supplies
• settle balances
• maintain documentation
• update tax portals
• disable invoicing
Non-compliance delays closure and triggers audit attention.

Do and Don’t Based on Audit Findings

Do
• reconcile GST/QST before requesting closure
• maintain inventory and asset valuations
• verify portal notices
• keep all documents after closure
• consult a CPA before submitting deregistration
Don’t
• assume closure cancels tax obligations
• ignore deemed supplies
• cancel accounts before filing final returns
• mix personal and business records
• overlook trust-fund balances

Common Mistakes When De-Registering

Businesses often
• forget to file previous periods
• miscalculate deemed supplies
• hide or discard remaining inventory
• apply for deregistration too early
• fail to remit final GST/QST
• ignore refund freezes
• assume the account is closed without confirmation
These errors produce tax bills long after the business has shut down.

Winning With Revenue Québec

Mackisen provides
• full GST/QST closure services
• reconciliation of all periods
• deemed supply calculations
• final return preparation
• audit-ready documentation
• trust-fund compliance cleanup
• CRA and RQ deregistration processing
With more than 35+ years of combined experience, we ensure your closure is clean, compliant, and fully protected.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montréal ensures that your GST/QST de-registration is completed correctly, legally, and without audit risk. We protect you from penalties, trust-fund exposure, frozen refunds, and future reassessments—so you can close your business safely and confidently.