How to Keep Your GST/QST Records Audit-Ready

Introduction
Maintaining organized, audit-ready records for GST (Goods and Services Tax) and QST (Quebec Sales Tax) isn’t just good practice it’s a legal requirement under both the Canada Revenue Agency (CRA) and Revenu Québec (ARQ). Incomplete, disorganized, or missing records can result in penalties, denied tax credits, and reassessments going back several years.

At Mackisen CPA Montreal, we’ve helped hundreds of Quebec businesses pass CRA and Revenu Québec audits with zero adjustments simply because their documentation was complete and consistent. This guide explains exactly what records you must keep, how to organize them, and how to build a permanent audit-proof system for your GST/QST filings.

Legal and Regulatory Framework
The law clearly defines your recordkeeping obligations:

• Excise Tax Act (Canada) s.230(1) — Every GST registrant must keep books and records that “enable the determination of taxes payable.”

• Tax Administration Act (Quebec) s.34 — All registrants must preserve supporting documentation for at least six years from the end of the fiscal year.

• Tax Administration Act s.59(3) — Authorizes penalties and interest if the taxpayer cannot produce documentation upon request.

• CRA Policy P-220 / Revenu Québec Guide IN-203-V — Outline acceptable digital formats for invoices, receipts, and ledgers.

Proper documentation protects your right to claim Input Tax Credits (ITCs) and Input Tax Refunds (ITRs), the two most common areas audited by CRA and Revenu Québec.

Step-by-Step: How to Keep GST/QST Records Audit-Ready

1. Create a Centralized Filing System

   • Separate GST/QST records from general accounting files.

   • Maintain folders (physical or digital) for:

     • Sales invoices

     • Purchase invoices and receipts

     • Bank statements

     • Credit card statements

     • Tax return confirmations

     • CRA and ARQ correspondence

2. Ensure Every Invoice Meets Legal Standards
   Each invoice must display:

   • Supplier’s full name and address

   • Invoice number and date

   • Description of goods or services

   • Total before tax, GST (5%), and QST (9.975%) separately

   • Supplier’s valid GST number (RT) and QST number (TQ)

   • Total amount payable

   Missing registration numbers are the #1 reason auditors deny ITCs and ITRs.

3. Record All Transactions Promptly

   • Enter sales and purchases in your accounting system weekly.

   • Match bank deposits and withdrawals to invoices.

   • Avoid back-dating entries; the CRA and ARQ can trace posting delays through merchant data.

4. Reconcile Monthly

   • Reconcile GST/QST collected vs. remitted and ITCs/ITRs claimed.

   • Produce monthly summaries that tie directly to your FPZ-500-V (QST) and CRA GST return lines.

5. Maintain Proof of Payment

   • Keep bank transfers, cancelled cheques, or electronic receipts linking every expense to a payment.

   • Auditors frequently request this as evidence that expenses were business-related.

6. Archive Records Securely for Six Years

   • CRA and Revenu Québec accept scanned or electronic copies if legible and retrievable.

   • Use cloud storage with backup redundancy.

   • Label files by year and period (e.g., “2025-Q1 GST/QST”).

7. Document Internal Controls

   • Record who prepares, reviews, and approves each GST/QST return.

   • Keep copies of signed approvals and reconciliation reports.

   • For corporations, maintain meeting minutes authorizing filings and payments.

Jurisprudence and Legal Insight
Key rulings emphasize documentation as the taxpayer’s burden of proof:

• Hickman Motors Ltd. v. Canada (SCC 1997) — CRA assessments are presumed correct; taxpayers must prove accuracy with records.

• Canderel Ltd. v. Canada (SCC 1998) — Reported figures must reflect commercial reality, supported by documentation.

• Lac d’Amiante du Québec Ltée (SCC 2001) — Revenu Québec has authority to demand original or digital copies of all tax-related records.

In short, if it’s not documented, it doesn’t exist for audit purposes.

Documentation: The Mackisen Audit-Ready Checklist
To survive any audit, your files should contain:

• Invoices (sales and purchases) with tax numbers shown

• Proof of payments (bank/credit card)

• Monthly reconciliation reports

• CRA/ARQ filing confirmations

• ITC/ITR calculation worksheets

• Correspondence with suppliers and tax authorities

• Digital archive index (to locate documents quickly)

At Mackisen CPA Montreal, we organize all these items in a standardized Audit-Ready Binder, ensuring immediate access to every required proof.

How CRA and Revenu Québec Conduct Record Audits
Auditors typically:

1. Request your six-year GST/QST records (often via electronic upload).

2. Verify that supplier invoices contain valid registration numbers.

3. Cross-check your claimed ITCs/ITRs with supplier filings.

4. Compare bank statements with declared revenues and expenses.

5. Test a random sample of invoices; if errors exceed 10%, they extrapolate the adjustment to the entire period.

Proper organization lets you respond within hours, not weeks—minimizing disruption and penalties.

Winning With CRA and Revenu Québec
At Mackisen CPA Montreal, we ensure clients are audit-ready every day—not just at year-end:

1. Quarterly Reviews – We reconcile GST/QST filings and detect anomalies early.

2. Digital Archiving – We automate secure document storage for all invoices and proofs.

3. Compliance Testing – We simulate CRA/ARQ audit procedures to confirm readiness.

4. Audit Representation – Our CPA auditors and tax lawyers manage communications directly with auditors.

5. Penalty Relief – If issues arise, we file applications under Tax Administration Act s.94.1 or CRA Policy P-148 to reduce penalties.

Mackisen Service Hub: Permanent Audit Defense for Businesses
Our Mackisen Service Hub offers continuous GST/QST compliance and record-keeping services:

• Automated invoice capture and tax coding.

• Monthly reconciliations and filing confirmations.

• Secure cloud archiving and document indexing.

• Audit preparation and penalty relief applications.

Our bilingual professionals CPA auditors, tax lawyers, and compliance experts—trained at McGill, Université de Montréal, and Concordia University provide unmatched expertise in audit-proof record management.

Real Client Example
A Laval manufacturing firm faced a full Revenu Québec audit after inconsistent ITC claims. Mackisen CPA digitized six years of records, matched supplier GST/QST numbers, and created reconciliation schedules. The audit closed with no adjustments and a note of “excellent documentation practices.”

Why Mackisen
With more than 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures your GST/QST records are organized, compliant, and permanently audit-ready. We don’t wait for auditors to come we prepare your books so that when they do, you’re already two steps ahead.

When you choose Mackisen, every receipt is accounted for, every return is documented, and every audit becomes a confirmation of your professionalism, not a threat to your business.