How to Optimize Cash Flow Around GST/QST Remittances

Introduction
For many Quebec businesses, GST and QST remittances represent one of the largest cash outflows every month or quarter. While these taxes are collected on behalf of the government, poor planning or weak cash flow management can turn this simple obligation into a financial strain. Failing to remit GST/QST on time leads to compounded daily interest, frozen refunds, and potential audit scrutiny from both the Canada Revenue Agency (CRA) and Revenu Québec (ARQ).

At Mackisen CPA Montreal, we help businesses turn compliance into strategy. With over 35 years of combined CPA and legal experience, our experts teach companies how to manage their GST/QST obligations without disrupting working capital or growth. This guide shows you how to plan, forecast, and optimize cash flow around tax remittances—legally and intelligently.

Legal and Regulatory Framework
Businesses that collect GST and QST are trustees of government funds. The laws governing these obligations are clear:

• Excise Tax Act (Canada) s.225 and s.228 — GST collected must be reported and remitted within the prescribed reporting period.

• Taxation Act (Quebec) s.407 — requires QST registrants to remit taxes according to their assigned frequency (monthly, quarterly, or annually).

• Tax Administration Act (Quebec) s.59(3) — imposes daily interest on unpaid amounts.

• Excise Tax Act s.280(1) — establishes compounded daily interest on late remittances.

These provisions make punctual, planned remittances non-negotiable—but they also create opportunities for cash flow optimization through better forecasting, timing, and expense alignment.

Step-by-Step: How to Optimize Cash Flow for GST/QST Remittances

1. Create a Separate Tax Holding Account
   Always keep GST/QST collected separate from your operational funds. Open a dedicated savings account and transfer the tax portion of every sale immediately. This ensures that funds are available when it’s time to remit.

2. Forecast Your Tax Liability Monthly
   Even if you file quarterly, calculate GST/QST collected and Input Tax Credits/Refunds (ITCs/ITRs) each month. This provides visibility into upcoming obligations and avoids surprises.

3. Leverage Input Tax Credits (ITCs) and Input Tax Refunds (ITRs)
   Track your business purchases in real time. Claiming all eligible ITCs and ITRs reduces your net tax payable and improves short-term cash flow. Many businesses lose liquidity by forgetting eligible expenses such as rent, utilities, insurance, or professional fees.

4. Adjust Invoice Timing Strategically
   Consider timing high-value invoices near the start of your next reporting period. This can extend your payment deadline by up to three months, giving you more time to manage cash flow—without violating any tax law.

5. Match Collections With Remittances
   Avoid paying GST/QST before your clients pay you. If you offer credit terms (e.g., Net 30 or 45 days), align your remittance schedule so you remit taxes after receipt, not at invoicing.

6. Use CRA and Revenu Québec Online Payment Tools
   Pay electronically through CRA My Business Account or Revenu Québec’s Mon Dossier. This ensures same-day confirmation, preventing late payment interest.

7. File Early, Pay on the Deadline
   You can file returns in advance but defer payment until the due date. This builds goodwill with auditors while keeping cash in your account longer.

Jurisprudence and Legal Insights

• Canderel Ltd. v. Canada (SCC 1998) — confirmed that tax accounting must reflect commercial reality and sound financial management.

• Hickman Motors Ltd. v. Canada (SCC 1997) — reinforced that the taxpayer bears full responsibility for compliance and proof of accuracy.

• Royal Bank of Canada v. The Queen (FCA 2012) — established that delays or misallocations in remittance must be corrected with proper documentation.

These cases confirm that financial prudence and accurate recordkeeping are not only smart business—they’re legal obligations.

Documentation: Build a Cash Flow and Tax Calendar
To maintain strong liquidity while staying compliant:

• Maintain a GST/QST Cash Flow Calendar showing filing and payment dates.

• Prepare a monthly tax summary (tax collected, ITCs/ITRs, balance due).

• Keep copies of all electronic payment confirmations.

• Store accounting reports reconciling GST/QST collected vs. remitted.

• Document communications with CRA or Revenu Québec regarding payment arrangements.

At Mackisen CPA Montreal, we integrate cash flow forecasting directly into your tax calendar, helping you anticipate tax obligations up to 12 months in advance.

How CRA and Revenu Québec Review Payment Compliance
Both agencies monitor businesses for patterns of delayed or missed payments:

• CRA tracks GST balances through monthly filings and banking data.

• Revenu Québec compares reported collections with supplier and client filings to identify under-remittances.

• Persistent lateness can lead to account garnishment, refund holds, or bank lien actions.

Our CPA auditors work proactively with clients to manage communications with CRA and ARQ—ensuring that payment extensions, relief requests, or corrections are filed properly and without penalties.

Winning With CRA and Revenu Québec
Optimizing cash flow doesn’t mean delaying taxes—it means planning smarter. Mackisen CPA Montreal uses a five-step model for cash flow optimization:

1. Tax Forecasting – We calculate GST/QST payable in advance, allowing clients to budget with certainty.

2. Liquidity Planning – We align payment schedules with cash inflows and expense cycles.

3. Compliance Automation – We integrate automatic alerts for filing and payment deadlines.

4. Penalty Relief Applications – If delays occur, we prepare legal submissions under Tax Administration Act s.94.1.

5. Long-Term Tax Efficiency – We coordinate tax timing with strategic expense planning to improve working capital year-round.

Mackisen Service Hub: The Smart Way to Manage Taxes and Cash Flow
Our Mackisen Service Hub provides comprehensive cash flow and tax remittance management. Services include:

• GST/QST filing and payment scheduling.

• Real-time tax cash forecasting.

• Setup of separate tax holding accounts.

• Audit defense and penalty relief applications.

• Strategic financial planning for growing businesses.

Our bilingual team CPA auditors, tax lawyers, and financial strategists from McGill, Université de Montréal, and Concordia University brings unmatched experience in tax planning and compliance.

Real Client Example
A Montreal distribution company faced recurring cash flow shortages each quarter due to large QST remittances. Mackisen CPA analyzed their invoice cycle, restructured payment timing, and implemented an automated QST forecasting system. The company’s liquidity improved by 28%, and all remittances have since been made on time.

Why Mackisen
With more than 35 years of combined CPA and legal expertise, Mackisen CPA Montreal helps Quebec businesses turn tax compliance into financial control. We don’t just help you remit GST and QST we help you master cash flow so your business grows with stability, compliance, and confidence.

When you partner with Mackisen, your remittances are never a burden they’re part of your financial strategy for long-term success.