Tax Guide for Commercial Landlords in Quebec: GST/QST Rules, Lease Structures, and Deductible Property Expenses — CPA Firm Near You, Montreal

Introduction

Commercial landlords in Quebec manage office buildings, retail spaces, industrial units, and mixed-use properties — all of which come with important GST/QST obligations and complex tax rules. Because commercial rentals are taxable supplies, landlords must follow strict invoicing, remittance, and documentation requirements. This guide explains how commercial landlords must report rental income, apply GST/QST, structure leases properly, claim deductions, and how a CPA firm near you in Montreal can help prevent costly reassessments.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, all commercial rent is taxable, requiring landlords to register for GST and QST once annual revenues exceed the small-supplier threshold. Landlords must issue tax-compliant invoices showing GST/QST amounts, their tax numbers, and the nature of services provided. Commercial leases often include additional taxable charges such as CAM (common area maintenance), insurance recoveries, snow removal, security, and property-management fees. Deductible expenses include mortgage interest, property taxes, insurance, utilities, repairs, maintenance, professional fees, property management, and capital cost allowance for eligible assets. CRA and Revenu Québec require detailed receipts, supporting invoices, and lease agreements for all deductions.

Key Court Decisions

Courts have held that commercial landlords must remit GST/QST on all taxable rent and recoverable charges. Judges have denied deductions for undocumented repairs, unsubstantiated CAM charges, and personal expenses claimed as business costs. Case law confirms that capital improvements must be depreciated through CCA, not deducted as repairs. Courts also emphasize that landlords must keep proper lease documentation to justify taxable and exempt portions of rent.

Why CRA and Revenu Québec Target Commercial Landlords

This sector is frequently audited because of:
• High rental revenues
• GST/QST remittance errors
• Complex lease structures
• Missing documentation for recoverable expenses
• Incorrect classification of capital improvements
• Mismatches between rent collected and rent reported

Auditors compare commercial leases, tenant statements, bank deposits, and GST/QST filings to ensure full compliance.

Mackisen Strategy

At Mackisen CPA Montreal, we help commercial landlords build complete accounting and tax systems designed for commercial property management. We determine GST/QST obligations, analyze lease structures, and ensure all invoices comply with tax law. We optimize deductions for repairs, maintenance, utilities, insurance, and capital cost allowance. Our team prepares year-end filings, organizes documentation for CAM and recoverable charges, and ensures all records meet CRA and Revenu Québec standards. If audited, we defend your deductions, reconstruct records, and negotiate to reduce reassessments.

Real Client Experience

A Montreal commercial landlord failed to remit GST/QST on additional rent charges, including snow removal and property maintenance. Revenu Québec issued a major reassessment. We reviewed the lease terms, recalculated GST/QST, corrected filings, and negotiated a reduced penalty structure. In another case, a landlord attempted to deduct capital upgrades as repairs; we reclassified the expenses correctly, preventing an audit escalation.

Common Questions

Are commercial rentals taxable?

Yes. GST and QST must be charged on base rent and most additional rent charges.

What expenses can commercial landlords deduct?

Mortgage interest, property taxes, insurance, repairs, utilities, professional fees, and capital cost allowance.

Are CAM charges taxable?

Yes. Most recoverable operating expenses are taxable unless specifically exempt.

What documentation must commercial landlords keep?

Leases, invoices, receipts, GST/QST returns, and detailed CAM reconciliations.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps commercial landlords stay compliant while maximizing deductions. Whether managing retail units, office buildings, or industrial spaces, our expert team ensures precision, transparency, and protection from audit risk.