How to Document Sales and Expenses for Easy GST/QST Filing

Introduction
Filing your GST and QST returns becomes significantly easier when your sales and expenses are properly documented. Most CRA and Revenu Québec reassessments don’t happen because of fraud—they happen because of poor documentation. Missing receipts, vague invoices, or inconsistent records can delay refunds, trigger audits, and even result in denied Input Tax Credits (ITCs) or Input Tax Refunds (ITRs).

At Mackisen CPA Montreal, we’ve seen firsthand how strong documentation transforms tax filing from a stressful task into a simple, predictable routine. Our experts have built audit-ready systems for hundreds of Quebec businesses, helping them save time, avoid penalties, and stay fully compliant with both the Excise Tax Act (Canada) and the Taxation Act (Quebec). This guide shows you exactly how to document sales and expenses to make GST/QST filing easy, accurate, and stress-free.

Legal and Regulatory Framework
Proper recordkeeping for GST and QST purposes is a legal obligation. The following laws set the requirements:

• Excise Tax Act (Canada) s.230(1) – Every registrant must maintain adequate books and records to determine tax obligations.

• Tax Administration Act (Quebec) s.34 – Requires all QST-registered businesses to preserve supporting documents for at least six years.

• Taxation Act (Quebec) s.407 and s.255(1) – Mandate accurate reporting of taxable supplies and proper documentation of QST collected and ITRs claimed.

Revenu Québec and CRA auditors rely on these records to verify your GST/QST filings. Missing or unclear records can lead to penalties or disallowed tax credits under Tax Administration Act s.59.

Step-by-Step: How to Document Sales and Expenses for Easy Filing

1. Create a Proper Invoicing System
   Every invoice must show:

   • Your business name and address.

   • Invoice number and date.

   • Customer’s name (for B2B transactions).

   • Description of goods or services.

   • Amount before tax, GST (5%), and QST (9.975%) shown separately.

   • Your GST number (RT) and QST number (TQ).

   • Total amount including taxes.

   Use invoicing software (QuickBooks, Xero, Sage) that automatically calculates and records taxes.

2. Record Every Sale Immediately
   Log every sale in your accounting system the same day it happens. Delayed entries are a leading cause of errors in tax filings. For cash businesses, maintain a daily sales summary showing total sales, GST/QST collected, and payment methods.

3. Track Expenses in Real Time
   Keep all business expense receipts. Each receipt should include:

   • Supplier name and address.

   • Invoice number and date.

   • Description of item/service.

   • GST/QST paid.

   • Supplier’s registration numbers.

   For recurring payments (rent, utilities, subscriptions), maintain copies of monthly statements.

4. Separate Business and Personal Transactions
   Use a dedicated business bank account and credit card. Mixing personal and business expenses is one of the most common—and costly—mistakes that cause CRA and Revenu Québec to deny ITCs and ITRs.

5. Reconcile Monthly
   At month-end, match:

   • Sales totals to bank deposits.

   • Expense records to bank withdrawals.

   • GST/QST collected vs. remitted.
     This ensures accuracy before filing and prevents cumulative discrepancies.

6. Maintain Digital Backups
   Scan or photograph all invoices and receipts. CRA and Revenu Québec accept digital copies as valid proof under Lac d’Amiante du Québec Ltée (SCC 2001), provided they are legible and traceable.

Jurisprudence and Legal Lessons
Canadian courts have consistently emphasized that documentation—not intention—determines compliance:

• Canderel Ltd. v. Canada (SCC 1998) – Tax returns must reflect commercial reality; vague or incomplete records weaken claims.

• Hickman Motors Ltd. v. Canada (SCC 1997) – CRA assessments are presumed correct until taxpayers prove otherwise through records.

• Vancouver Art Metal Works Ltd. v. Canada (FCA 2015) – Input tax credits were denied because invoices lacked supplier GST numbers.

These rulings reinforce that well-documented transactions are your strongest legal defense.

Documentation Checklist for GST/QST Filing
Maintain these records for at least six years:

• Sales invoices and daily sales reports.

• Supplier invoices and receipts.

• Credit and debit notes for returns or adjustments.

• Bank statements and credit card summaries.

• Payroll and subcontractor records (if applicable).

• Proof of payments (cheques, e-transfers, deposits).

• CRA and Revenu Québec filing confirmations.

How CRA and Revenu Québec Review Documentation
Both agencies use digital verification tools that compare:

• Your declared sales with supplier reports.

• Your ITCs/ITRs with supplier QST filings.

• Bank deposits with declared income.

• Merchant processor data (Visa, Square, PayPal, etc.) with sales reports.

Discrepancies automatically flag your account for a desk audit. Mackisen CPA conducts pre-audit reconciliations to catch and correct these mismatches before the government does.

Winning With CRA and Revenu Québec
At Mackisen CPA Montreal, we believe success in any audit or filing comes down to documentation discipline. Our proven process includes:

1. Record Structuring – We standardize how your sales and expenses are categorized and stored.

2. Real-Time Reconciliation – Our team monitors monthly GST/QST data for anomalies.

3. Audit Simulation – We test your records using the same verification methods CRA and ARQ use.

4. Voluntary Disclosure and Relief – If you find gaps in past filings, we file voluntary corrections under Tax Administration Act s.94.1 to minimize penalties.

5. Long-Term Compliance Plan – We install systems that keep your GST/QST filing permanently organized and error-free.

Mackisen Service Hub: Documentation and Compliance Experts
The Mackisen Service Hub in Montreal offers turnkey documentation and filing solutions for Quebec businesses. Our services include:

• Monthly bookkeeping with full GST/QST tracking.

• Automated invoicing and receipt management.

• CRA and Revenu Québec filing and representation.

• Audit preparation and defense documentation.

Each member of our team—CPA auditors, tax lawyers, and compliance specialists—has deep experience with Revenu Québec and CRA documentation standards.

Real Client Example
A Montreal consulting firm lost $18,000 in QST refunds after a Revenu Québec audit found missing supplier GST/QST numbers on invoices. Mackisen CPA obtained updated invoices, reconstructed digital records, and filed an objection under Tax Administration Act s.93.1. The refunds were reinstated within eight weeks, and the client implemented our documentation system for future filings.

Why Mackisen
With more than 35 years of combined CPA and legal experience, Mackisen CPA Montreal helps businesses document, file, and defend their GST/QST returns flawlessly. We build your audit-proof foundation—so every sale, every expense, and every tax credit is supported by undeniable proof.

When you partner with Mackisen, your books aren’t just compliant—they’re your best defense.