Overcharged or Undercharged GST/QST by Mistake? Fixing Invoice Errors the Right Way

Every business eventually makes a tax mistake on an invoice charging too much GST/QST, or not enough. These errors are common among freelancers, consultants, retailers, contractors, and e-commerce sellers. While easy to make, they must be corrected properly to avoid penalties, unhappy clients, refund issues, or Revenu Québec scrutiny.

This guide explains exactly what to do when you’ve charged the wrong amount of GST/QST, how to correct invoices, and how to resolve mistakes in your filed returns.

Step 1 — Identify the Type of Error

Invoice errors fall into two categories:

1. Undercharging GST/QST

You charged less tax than required, or none at all.

2. Overcharging GST/QST

You charged more tax than required, either by mistake or due to incorrect tax settings.

Each scenario requires a different correction method.

Step 2 — If You Undercharged GST/QST

This is the more serious error because Revenu Québec expects you to remit the full amount of tax that should have been collected, even if you did not charge your client.

You have two options:

Option A — Ask the Client to Pay the Missing Tax

Issue a corrected or supplemental invoice that includes:
• the missing GST and/or QST
• a note explaining the correction

Clients are not obligated to pay retroactive tax.

Option B — Treat the Original Amount as Tax-Included

Most businesses choose this to avoid disputes.

Example:
Invoice total = $1,000 (no GST/QST charged)
QST embedded = $1,000 ÷ 1.09975 × 0.09975
GST embedded = $1,000 ÷ 1.14975 × 0.05

You absorb the tax and remit it yourself.

Step 3 — If You Overcharged GST/QST

You collected more tax than you should have. You must:

1. Refund the excess tax to the client, or

2. Apply a credit note and adjust your records

Do not keep overcharged tax Revenu Québec considers that improper collection.

You may also need to amend your GST/QST filing for that period.

Step 4 — Correct Your Accounting Software or POS System

Most invoice tax errors are caused by:
• incorrect QuickBooks or Xero tax codes
• Shopify or WooCommerce misconfigurations
• manual changes to tax lines
• outdated POS programming
• improper tax mapping on new products/services

Fixing the root cause prevents future mistakes.

Step 5 — Adjust Your GST/QST Return (If Necessary)

If the invoice error affects a period already filed:
• file an adjustment
• or file an amended return

This ensures your GST/QST collected and remitted matches reality.

Incorrect filings increase audit risk corrections reduce it.

Step 6 — Document Everything

For audit protection, keep:
• original invoice
• corrected invoice or credit note
• explanation for the correction
• refund/repayment proof
• revised GST/QST schedules
• email correspondence with the client

Revenu Québec frequently asks for documentation when corrections affect remittances or refunds.

Step 7 — Train Staff and Standardize Invoicing Procedures

Especially important for:
• retail businesses
• contractors
• companies with multiple employees issuing invoices

Create a checklist that includes:
• correct tax rates
• correct tax codes
• correct tax jurisdiction for client
• verification before sending invoices

This reduces errors dramatically.

What NOT to Do

• Don’t ignore invoice errors
• Don’t hope Revenu Québec “won’t notice”
• Don’t delete invoices (issue corrections instead)
• Don’t misclassify corrections in accounting software
• Don’t wait until the next filing period to fix major errors

Real Client Stories

A contractor undercharged QST on three large projects. Mackisen recalculated tax-included QST and amended filings avoiding penalties.

A retailer overcharged QST for multiple items due to a POS setup error. Mackisen fixed the system and issued credit notes to clients.

A consultant charged GST/QST on exempt services. Mackisen corrected invoices, refunded clients, and avoided audit complications.

Common Questions

Do I always need to amend my return?
Only if the error affects GST/QST collected or remitted.

Can a client refuse to pay retroactive tax?
Yes you may need to absorb the tax.

Will correcting errors trigger an audit?
No but ignoring them frequently does.

Is refunding overcharged tax mandatory?
Yes it cannot be kept.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses correct GST/QST invoice errors, adjust filings, avoid penalties, and implement systems to maintain 100% tax accuracy.