How to File Adjustments to Prior GST/QST Returns

Introduction
No matter how organized your accounting system is, errors can still slip into your GST and QST filings—an incorrect total, a missing receipt, or an invoice that was overlooked. Fortunately, both the Canada Revenue Agency (CRA) and Revenu Québec (ARQ) allow businesses to file adjustments to correct previous GST and QST returns.

But timing and accuracy matter. If you delay too long or fail to document your corrections, the CRA or Revenu Québec may treat your changes as a new reassessment request, potentially triggering an audit. Understanding how to properly file adjustments to prior GST/QST returns can save you penalties, preserve your refunds, and prove to the authorities that your business operates with integrity.

At Mackisen CPA Montreal, our auditors, accountants, and tax lawyers work together to fix these errors professionally. With over 35 years of combined experience, we’ve helped businesses file thousands of corrections, recover denied input tax credits (ITCs) and input tax refunds (ITRs), and prevent costly reassessments.

Legal and Regulatory Framework
The process for adjusting prior returns is legally recognized and governed by:

• Excise Tax Act (s. 296 and s. 299) – CRA may reassess or accept corrections to GST filings within four years of the original due date.

• Tax Administration Act (s. 93 and s. 94.1) – Revenu Québec allows voluntary adjustments or penalty relief for honest mistakes.

• Income Tax Act (s. 152(3.1)) – establishes that taxpayers can request changes before a reassessment becomes final.

Under these provisions, corrections can be submitted voluntarily. If you wait until after an audit notice is issued, your right to file adjustments may be denied, and the case will fall under reassessment procedures with additional interest.

When and Why You Should File Adjustments
Filing an adjustment is necessary if:

• You discover missing sales or overreported income.

• You realize some expenses or input tax credits/refunds were not claimed.

• A supplier issued a revised invoice or credit note after you filed.

• An accounting or bookkeeping entry was duplicated or omitted.

• CRA or Revenu Québec flagged an error and asked you to correct it.

Voluntary corrections demonstrate good faith and often qualify for reduced penalties under Tax Administration Act s.94.1.

Step-by-Step: How to File Adjustments to Prior GST/QST Returns

1. Identify and Document the Error
   Review your prior GST/QST returns and accounting records. Compare your sales, purchases, and claimed credits against invoices and bank deposits. Identify the exact period and nature of the discrepancy.

2. Gather Supporting Evidence
   Collect all relevant receipts, invoices, and proof of payments. The CRA and Revenu Québec require documentation for every adjustment—especially if it affects taxable sales or ITCs/ITRs.

3. Complete Adjustment Forms

   • CRA (GST/HST): Use Form GST189, or submit corrections directly through the My Business Account portal.

   • Revenu Québec (QST): Use Form FP-500-V (Request for Adjustment of a Return) via the Mon Dossier portal.

4. Provide a Clear Explanation
   Include a detailed description of the correction—why it occurred, which period it affects, and how the figures were recalculated. Vague explanations often lead to processing delays or verification requests.

5. Track Confirmation and Follow-Up
   Retain submission receipts and monitor your account. CRA and ARQ typically take 4–8 weeks to process adjustments. If the correction involves large credits or refunds, expect verification before approval.

Jurisprudence and Legal Insights
The right to file adjustments has been upheld and clarified by Canadian courts:

• Canderel Ltd. v. Canada (SCC 1998) – Filings must reflect commercial reality, not estimation. Corrections backed by valid evidence are legally justified.

• Hickman Motors Ltd. v. Canada (SCC 1997) – CRA assessments are presumed correct; it is the taxpayer’s responsibility to prove a correction is valid.

• Lac d’Amiante du Québec Ltée (SCC 2001) – Revenu Québec retains audit powers to verify the authenticity of adjustments, even if voluntarily disclosed.

These cases highlight a vital lesson: accuracy and evidence are the foundation of credibility with tax authorities.

Documentation: Creating an Adjustment Defense File
Proper documentation is your insurance policy against disputes. Every time you file an adjustment, build a clear audit file containing:

• The original return and line-by-line comparison with the adjusted version.

• Copies of corrected invoices and receipts.

• Internal notes explaining the nature and timing of the error.

• Proof of submission (acknowledgment emails or portal confirmations).

• Correspondence with CRA or Revenu Québec.

This file serves as a permanent defense if your adjustment is reviewed in a future audit. At Mackisen CPA Montreal, we maintain all client adjustments in a secure digital archive accessible for six years in case of inspection.

How CRA and Revenu Québec Handle Adjustment Reviews
Once your request is received, both agencies follow a verification process:

1. Initial Review – The file is screened electronically for completeness.

2. Document Verification – If the correction increases a refund, the claim is flagged for manual review.

3. Decision and Reassessment – The agency issues either a confirmation of change or a notice of reassessment.

If the agency disagrees with your correction, it may issue a reassessment under Excise Tax Act s.297 or Tax Administration Act s.93, potentially with interest. You have 90 days to object under Income Tax Act s.165(1) or Tax Administration Act s.93.1.

Winning With Revenu Québec and CRA
At Mackisen CPA Montreal, we help clients resolve adjustment disputes by combining accounting precision with legal strategy.

Our 35+ years of experience prove one thing—winning comes from preparation, professionalism, and presentation. We:

• Recalculate and validate all figures before submission.

• Reconstruct missing documentation to strengthen your claim.

• Communicate directly with CRA and Revenu Québec auditors on your behalf.

• Negotiate interest and penalty relief for voluntary corrections under TAA s.94.1 and CRA’s Policy P-148.

Mackisen Service Hub: The Expert Advantage
Our Mackisen Service Hub is Montreal’s dedicated compliance and correction center. We specialize in:

• GST/QST return adjustments for past years.

• Voluntary disclosures for unreported transactions.

• Full coordination between CRA and Revenu Québec filings.

• Representation during adjustment reviews and reassessments.

Every member of our Service Hub—CPA auditors, tax lawyers, and accounting professionals—brings decades of combined experience and academic backgrounds from McGill University, Université de Montréal, and Concordia University.

Real Client Example
A Laval-based contractor underreported $120,000 in taxable sales over two years due to software integration errors. Mackisen CPA identified the discrepancies, filed corrected GST and QST returns, and negotiated penalty relief. CRA accepted the voluntary adjustment without interest, and Revenu Québec approved the revised filings within six weeks.

Why Mackisen
With more than 35 years of combined CPA, audit, and legal experience, Mackisen CPA Montreal ensures your adjustments are handled correctly, legally, and professionally. We don’t just fix your returns—we protect your reputation and build a stronger compliance foundation for your future filings.