SHOULD I INCLUDE SALES TAX IN MY PRICES OR ADD IT AT CHECKOUT

One of the biggest pricing decisions Quebec business owners face is whether to include GST/QST in their advertised prices or add tax at checkout. The choice affects sales psychology, compliance, customer perception, and business operations. Many businesses adopt tax-included pricing without understanding Quebec’s strict rules, while others add tax at checkout but struggle with customer pushback. This guide explains when you should include tax in your prices, when you should not, and what the law requires for GST/QST disclosure.

Understanding pricing rules helps you stay compliant and choose the strategy that makes the most sense for your industry.

LEGAL AND REGULATORY FRAMEWORK

Pricing rules are governed by:

• the Consumer Protection Act (Quebec)
• the Excise Tax Act (GST)
• the Quebec Taxation Act (QST)

Key legal principles:

• Businesses may use tax-included or tax-added pricing.
• If prices are tax-included, the business must clearly state “taxes included” on all displays and receipts.
• Businesses must calculate GST/QST correctly regardless of pricing method.
• Revenue Québec may request breakdowns showing how GST/QST was computed.

In most industries, both methods are permitted — but transparency is required.

KEY COURT DECISIONS

Courts have ruled that:

• tax-included prices must still allow customers to know how much GST/QST they paid
• retailers must maintain documentation showing separate GST/QST components
• misleading price displays (e.g., hiding tax amounts) violate consumer law
• restaurants and service businesses must clearly indicate when prices include tax
• adding tax without proper disclosure is considered deceptive pricing

These decisions highlight the importance of clear communication.

WHY THIS DECISION MATTERS FOR YOUR BUSINESS

Your pricing method affects:

• customer perception
• conversion rates (especially in retail and services)
• e-commerce usability
• compliance with consumer law
• bookkeeping simplicity
• amount of GST/QST you remit
• competitive positioning

The wrong choice can cause confusion, lost sales, or compliance issues.

OPTION 1 — INCLUDE TAX IN YOUR PRICES

(“Prix taxes incluses”)

This method is used primarily in:

• restaurants
• cafés
• barbers, salons, spas
• transportation services
• tourism businesses
• event tickets
• certain retail displays
• businesses targeting consumer markets

Advantages of tax-included pricing

• Creates simplicity for customers
• Eliminates surprise at checkout
• Speeds up POS transactions
• Useful for exact-cash industries
• Helps psychological pricing (“$20 flat”)
• Aligns well with retail + service sectors
• Reduces price disputes

Disadvantages

• Customers may believe you are more expensive
• You must calculate GST/QST backwards
• Accounting becomes more complex
• Business clients may dislike tax-included invoices
• Harder to compare pre-tax margins

When tax-included pricing is recommended

• High-volume retail
• Food service
• Beauty and wellness
• Transportation
• Tourism
• Cash-heavy environments

OPTION 2  ADD TAX AT CHECKOUT

(Tax shown separately)

This method is standard for:

• consultants
• freelancers
• contractors
• B2B businesses
• online stores
• software companies
• professional services
• retail environments where transparency is expected

Advantages of adding tax at checkout

• Business clients expect pre-tax pricing
• Easier financial reporting
• No reverse-calculation required
• Customers know exactly what tax they are paying
• Helps maintain clear margins
• Required for many B2B industries

Disadvantages

• Final checkout price may surprise customers
• Risk of “sticker shock,” especially for consumer-facing businesses
• More visible taxes can reduce perceived value

When tax-added pricing is recommended

• Professional services
• E-commerce
• Contractors and trades
• B2B services
• High-ticket products
• Software and technology products

HOW TO CALCULATE TAX-INCLUDED PRICES

If your tax-included price is $100:

Total tax rate = GST 5% + QST 9.975% = 14.975%

To extract taxes:

• Pre-tax price = $100 / 1.14975 = $86.96
• GST = $86.96 × 5% = $4.35
• QST = $86.96 × 9.975% = $8.69

Your receipts must show these amounts separately.

HOW TO DECIDE WHICH METHOD IS RIGHT FOR YOU

Use this decision framework:

1. Who is your primary customer?

• Consumers → tax-included works best
• Businesses → always add tax

2. How is your industry priced?

Customers expect consistency.

3. Do you use cash-heavy transactions?

Tax-included prevents hassles with exact change.

4. Is transparency important?

Consultants, contractors, and B2B businesses must show tax separately.

5. Will tax-included pricing lower perceived value?

In some sectors, yes.

6. Do you run an online store?

Most e-commerce platforms automatically add tax at checkout → recommended.

COMMON MISTAKES TO AVOID

• showing tax-included prices without disclosure
• confusing customers by using both pricing methods inconsistently
• failing to break down GST/QST on receipts
• using tax-included pricing but miscalculating the pre-tax amount
• forgetting to update POS or e-commerce settings properly

These issues often lead to customer complaints or compliance warnings.

MACKISEN STRATEGY

Mackisen CPA helps businesses choose the right pricing model for their industry and ensures all GST/QST calculations are correct. We configure accounting, POS systems, and invoicing software for tax-included or tax-added pricing. Our team also builds compliant invoice templates and ensures GST/QST reporting aligns with your pricing structure.

REAL CLIENT EXPERIENCE

A restaurant used tax-included pricing but miscalculated QST for three years. Mackisen corrected the calculations and refiled returns.

A beauty salon switched to tax-included pricing to eliminate cash frustration. Mackisen set up compliant receipts and POS settings.

A consulting firm accidentally used tax-included pricing for business clients. Mackisen updated all invoices and corrected filings.

COMMON QUESTIONS

Is tax-included pricing legal in Quebec?
Yes, but disclosure is required.

Do I need to show tax breakdowns on receipts?
Yes, GST and QST must appear separately.

Can I switch methods anytime?
Yes, but update POS, pricing, contracts, and accounting.

Does tax-included pricing affect GST/QST remittance?
No, the same amounts must still be remitted.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses make strategic pricing decisions while staying fully compliant with GST/QST rules. Our expertise ensures accurate tax application, clear financial reporting, and better customer experience.