How to Manage GST/QST When Your Business Operates in Quebec and Ontario

Introduction

Expanding your business across Quebec and Ontario opens exciting growth opportunities — but it also brings complex sales tax obligations. Businesses operating in both provinces must understand how to charge, collect, and remit GST (Goods and Services Tax), QST (Quebec Sales Tax), and HST (Harmonized Sales Tax) correctly.

This guide from Mackisen CPA Montreal explains how to manage GST/QST compliance when your business has customers, operations, or offices in both Quebec and Ontario. You’ll learn how to register, apply the right tax rates, and file accurately with Revenu Québec and the Canada Revenue Agency (CRA).

Legal and Regulatory Framework

The two systems operate under different legislation:

• Excise Tax Act (R.S.C. 1985, c. E-15) — federal GST/HST, administered by the CRA.

• Quebec Sales Tax Act (R.S.Q., c. T-0.1) — provincial QST, administered by Revenu Québec.

Quebec collects both QST and GST for Quebec-based businesses, while the CRA collects HST for Ontario-based operations.
Your tax obligations depend on where your business is located, where sales occur, and where customers receive goods or services.

Learning Insight

If your business operates in both provinces, you may need two active tax accounts — one with Revenu Québec (for GST/QST) and one with the CRA (for GST/HST).

Step-by-Step: How to Manage GST/QST in Quebec and Ontario

Step 1 — Understand the Tax Systems

In Quebec, businesses collect two separate taxes (GST and QST).

In Ontario, HST replaces both — a single combined rate collected federally by the CRA.

Step 2 — Register in Both Jurisdictions

Scenario 1 – Quebec Business Selling to Ontario Customers
If your business is based in Quebec and you sell to Ontario customers, you must:

• Register for GST/HST with the CRA.

• Continue filing QST with Revenu Québec for Quebec operations.

Scenario 2 – Ontario Business Expanding into Quebec
If your Ontario-based company opens a location or sells goods/services in Quebec, you must:

• Register for QST with Revenu Québec using Form LM-1-V.

• Continue to remit HST to the CRA for Ontario sales.

Learning Insight

Each province’s registration is separate. Revenu Québec will assign a QST number and administer your GST filings in Quebec, while CRA manages your Ontario HST account.

Step 3 — Charge the Correct Tax Based on Customer Location

Example 1 – Quebec Sale:
Montreal customer buys $1,000 service.
GST 5% = $50, QST 9.975% = $99.75.
Total: $1,149.75 → File through Revenu Québec.

Example 2 – Ontario Sale:
Toronto customer buys $1,000 product.
HST 13% = $130.
Total: $1,130 → File through CRA.

Step 4 — File Two Separate Returns

1. Revenu Québec: File combined GST + QST return for Quebec activities via Mon dossier pour les entreprises.

2. CRA: File HST return for Ontario sales via My Business Account.

Keep clear records separating Quebec and Ontario revenues to ensure accurate filing.

Tip:
Use accounting software with multi-jurisdictional tax tracking (e.g., QuickBooks, Xero, or Sage). Set up distinct tax codes:

• QC – GST 5% + QST 9.975%

• ON – HST 13%

Learning Insight

Even though GST and HST share the same 5% federal portion, they must be reported separately to each agency — never combined.

Step 5 — Manage Input Tax Credits (ITCs) and Input Tax Refunds (ITRs)

When operating in two provinces, you must claim input credits correctly based on where the expense applies:

• ITCs — for GST/HST paid on business expenses in Ontario and other HST provinces (claimed on your CRA return).

• ITRs — for QST paid on Quebec business expenses (claimed on your Revenu Québec return).

Keep separate expense accounts or tracking categories for each province.

Example:

• Quebec office rent → claim QST ITR.

• Ontario marketing expenses → claim HST ITC.

Step 6 — Handle Inter-Provincial Transfers

If you transfer goods or assets between Quebec and Ontario locations:

• Apply GST/HST/QST according to destination province (where goods are delivered).

• Keep documentation showing inter-company transfers to justify non-taxable movements.

Common Mistakes to Avoid

• Charging QST on Ontario sales or HST on Quebec sales.

• Filing combined GST/HST/QST in one return.

• Using the wrong remittance account for each province.

• Failing to register for QST after opening operations in Quebec.

• Not separating ITCs and ITRs by province.

Learning Insight

CRA and Revenu Québec regularly share data — discrepancies between your HST and QST filings can trigger an audit in both jurisdictions.

Real Quebec-Ontario Business Example

A Montreal consulting firm started selling services in Toronto without registering for HST. CRA later assessed $9,000 in unremitted HST. After Mackisen CPA’s intervention, the firm registered, amended returns, and established dual-province filing procedures.

Another company with offices in both Montreal and Ottawa maintained two distinct tax accounts, used automated tax codes in its accounting software, and passed three years of CRA/Revenu Québec audits with no issues.

Lesson: separate accounts and filings are key to smooth compliance.

Compliance Checklist

Do

• Register with both CRA (GST/HST) and Revenu Québec (GST/QST).

• Apply the correct tax based on where your customer is located.

• Keep Quebec and Ontario revenues separate.

• Claim ITCs and ITRs in the correct jurisdiction.

• File both returns on time and retain six years of records.

Don’t

• Combine Quebec and Ontario taxes in one filing.

• Charge the wrong tax rate on inter-provincial sales.

• Ignore cross-province compliance notices.

• Use one tax number for both provinces.

Mackisen Strategy

At Mackisen CPA Montreal, we specialize in cross-province compliance for businesses operating in Quebec and Ontario. Our CPA team:

1. Registers your business correctly in both provinces.

2. Configures your accounting software for dual reporting.

3. Prepares reconciled GST/HST and QST filings.

4. Provides continuous audit-ready documentation and support.

We ensure your growing business stays compliant and efficient — on both sides of the provincial border.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses operate confidently across Quebec and Ontario. We handle tax registration, filing, and optimization with precision — ensuring complete compliance with both CRA and Revenu Québec.