Insights
Nov 12, 2025
Mackisen
How to Use Tax-Inclusive Pricing vs. Tax-Added Pricing in Quebec — Montreal CPA Firm Near You
Introduction
Pricing your products or services correctly under Quebec’s GST (Goods and Services Tax) and QST (Quebec Sales Tax) rules is more than a marketing decision — it’s a compliance requirement. Whether you choose tax-inclusive pricing (where taxes are already built into the displayed price) or tax-added pricing (where taxes are calculated at checkout), you must ensure your pricing structure follows Revenu Québec and Canada Revenue Agency (CRA) standards.
At Mackisen CPA Montreal, we help Quebec businesses, retailers, and e-commerce stores set up pricing systems that are transparent, compliant, and optimized for customers. This guide explains how tax-inclusive and tax-added pricing work, when to use each, and how to apply them properly in your invoices and POS systems.
Legal and Regulatory Framework
Pricing transparency and tax calculation rules are set by:
Excise Tax Act (Canada) s.165(1) — imposes a 5% GST on taxable goods and services.
Taxation Act (Quebec) s.255(1) — applies QST at 9.975% on the GST-inclusive price.
Consumer Protection Act (Quebec) s.224(c) — requires advertised prices for consumer goods to include all mandatory charges, including taxes, unless otherwise clearly stated.
Revenu Québec Directive TVQ.206.2 — clarifies disclosure requirements for QST-included and QST-added pricing.
These laws mean that both tax-added and tax-inclusive pricing are permitted in Quebec, but whichever you use must be clearly communicated to customers and accurately documented in your accounting records.
1. Understanding Tax-Inclusive Pricing
Definition:
Tax-inclusive pricing means the price you display already includes GST and QST. The customer pays exactly what they see on the label, no extra calculation required.
Example:
Label price: $115.47
GST (5%) + QST (9.975%) included in total.
Pre-tax price = $115.47 ÷ (1.05 × 1.09975) = $100.00
When to Use Tax-Inclusive Pricing:
Retail and consumer sales where simplicity matters (restaurants, salons, event tickets).
Government-regulated industries like fuel and tobacco (where all-in pricing is required).
Tourism and entertainment to avoid confusion with international clients.
Advantages:
Customer-friendly: transparent “what-you-see-is-what-you-pay” model.
Avoids disputes over tax rounding.
Complies with Quebec’s Consumer Protection Act for displayed prices.
Disadvantages:
Slightly more complex accounting — you must separate taxes when recording sales.
Excel Formula to Extract Taxes from Inclusive Prices:
If your total price (with taxes) is in cell A2:
(Base price before tax)
Then calculate:
2. Understanding Tax-Added Pricing
Definition:
Tax-added pricing means taxes are added at the point of sale or invoicing. Customers see a pre-tax price, then GST and QST are added at checkout.
Example:
Price before tax: $100.00
GST (5%): $5.00
QST (9.975% on $105): $10.47
Total: $115.47
When to Use Tax-Added Pricing:
B2B transactions, where clients can claim ITCs (Input Tax Credits) and ITRs (Input Tax Refunds).
Service-based companies (consultants, professionals, trades).
E-commerce or wholesale businesses, where transparency about tax components is important.
Advantages:
Easier accounting and reconciliation of GST/QST collected.
Allows business customers to track tax paid for ITC/ITR claims.
Matches CRA and Revenu Québec filing lines directly.
Disadvantages:
Consumers may perceive the final cost as higher than expected.
Requires clear labeling in pricing displays (“+taxes”).
Excel Formula for Tax-Added Pricing:
If base price is in cell A2:
To show taxes separately:
3. Key Compliance Rules for Displayed Prices in Quebec
For Consumers (B2C):
All advertised prices (storefronts, menus, websites) must include all mandatory fees and clearly indicate if taxes are extra.
Example of compliant signage:
“Price: $100 + taxes” (tax-added)
“Price: $115.47 (taxes included)” (tax-inclusive)
For Businesses (B2B):
Tax-added pricing is preferred because it shows GST and QST separately on invoices, allowing clients to claim input credits.
Each invoice must list:
Subtotal before tax.
GST and QST amounts.
Your GST and QST registration numbers.
Total including taxes.
Jurisprudence and Legal Insights
Canderel Ltd. v. Canada (SCC 1998) — affirmed that sales must reflect true economic substance and correct tax treatment.
Lac d’Amiante du Québec Ltée (SCC 2001) — validated Revenu Québec’s authority to reassess misapplied QST.
Office de la protection du consommateur c. Compagnie XYZ (2019) — confirmed that consumer-facing prices must include taxes unless “+ taxes” is clearly displayed.
These rulings emphasize transparency: businesses must state explicitly whether prices include or exclude taxes to avoid consumer complaints or administrative penalties.
4. How to Record Tax-Inclusive vs. Tax-Added Pricing in Accounting
Tax-Added Pricing Example:
Description | Pre-Tax | GST (5%) | QST (9.975%) | Total |
|---|---|---|---|---|
Service Fee | $100.00 | $5.00 | $10.47 | $115.47 |
Accounting Entry:
Debit Accounts Receivable $115.47
Credit Sales $100.00
Credit GST Payable $5.00
Credit QST Payable $10.47
Tax-Inclusive Pricing Example:
Description | Total (Incl. Taxes) | GST Portion | QST Portion | Net Sale |
|---|---|---|---|---|
Retail Sale | $115.47 | $5.00 | $10.47 | $100.00 |
Accounting Entry:
Debit Accounts Receivable $115.47
Credit Sales $100.00
Credit GST Payable $5.00
Credit QST Payable $10.47
The difference lies in how you calculate and display—not how you remit—your taxes.
Documentation: Ensuring Audit-Ready Compliance
To stay compliant under Tax Administration Act s.34, maintain:
Invoices and receipts clearly showing tax calculation method.
POS or e-commerce system settings proving tax configuration.
Records of advertised prices (“tax included” or “+ taxes”).
CRA and ARQ filing confirmations matching sales records.
At Mackisen CPA Montreal, we audit our clients’ invoicing systems quarterly to ensure displayed prices match tax filings exactly.
Winning With CRA and Revenu Québec
At Mackisen CPA Montreal, we help businesses stay compliant while optimizing pricing strategies:
System Configuration – We program POS and e-commerce systems for proper GST/QST handling.
Invoice Compliance – We design CRA- and ARQ-compliant invoice templates.
Audit Defense – Our tax lawyers prepare documentation proving correct tax calculation and disclosure.
Training and Verification – We train your staff on how to explain tax-inclusive vs. tax-added pricing to customers.
Mackisen Service Hub: Quebec Tax Compliance Simplified
Our Mackisen Service Hub provides full support for GST/QST pricing and filing, including:
Setup of compliant tax-added or tax-inclusive systems.
Reconciliation of sales data and returns.
Quarterly tax verification audits.
Bilingual training and compliance reviews.
Our bilingual CPA auditors, tax lawyers, and compliance specialists trained at McGill, Université de Montréal, and Concordia University ensure that every sale, receipt, and price tag in your business meets Quebec’s complex tax disclosure rules.
Real Client Example
A Montreal restaurant used inconsistent pricing some menus showed “taxes included,” others added tax at checkout. Revenu Québec audited for non-disclosure violations. Mackisen CPA standardized all prices as tax-inclusive, adjusted invoices, and prepared audit documentation. The restaurant avoided penalties and regained full compliance.
Why Mackisen
With over 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures your business prices, invoices, and tax filings are accurate, transparent, and fully compliant with Quebec law.
When you price with Mackisen, you gain more than numbers you gain clarity, credibility, and confidence in every transaction.
