What Happens If I Don’t File GST/QST Returns Annually Instead of Quarterly?

Many small businesses in Quebec mistakenly believe they can file GST/QST returns annually even when assigned a quarterly or monthly frequency. Others simply forget to file during the year and assume they can catch up by filing one annual return. Unfortunately, GST/QST filing frequency is not optional, and filing annually when you are required to file quarterly or monthly triggers penalties, interest, refund delays, and potential audits.

This guide explains what happens if you fail to respect your required frequency and try to file GST/QST returns annually instead of at the schedule assigned by Revenu Québec.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QST):

• Revenu Québec assigns your filing frequency based on annual revenue
• Businesses with > $6M revenue must file monthly
• Businesses with $1.5M–$6M revenue must file quarterly
• Businesses under $1.5M may choose annual, quarterly, or monthly

Once assigned, the frequency is mandatory unless officially changed.

Filing annually when you are required to file quarterly = late filing.

Key Court Decisions

Courts have ruled that:

• filing frequency must be respected even if the business misunderstood
• late filing penalties apply even if total GST/QST owing is zero
• “I didn’t know” or “my accountant didn’t tell me” is not a defence
• businesses must monitor and comply with assigned frequency
• CRA and Revenu Québec can reassess for late periods even after annual filing

These rulings confirm strict enforcement.

What Happens If You File Annually but Were Required to File Quarterly?

Here are the consequences.

1. Late Filing Penalties

For each quarter not filed on time, penalties apply.
If you file annually instead of quarterly, Revenu Québec treats all missing quarters as late returns.

Even if no tax is owing, the penalties still apply.

2. Daily Interest Charges

Interest continues to accumulate from the due date of each missed period.
If you had tax owing for any quarter, interest can become substantial.

3. Refunds Are Delayed or Withheld

If you were expecting a refund:

• Revenu Québec may freeze the refund
• Verification requests are more likely
• Refund may be applied to “missing” periods

Annual filing when quarterly was required automatically triggers review flags.

4. Your Account Is Flagged for Non-Compliance

Revenu Québec may:

• contact you
• send demand letters
• add your business to an “enhanced monitoring” category
• increase your audit likelihood

A pattern of late filing is one of the major audit triggers.

5. Estimated Assessments for Missing Quarters

If Revenu Québec detects missing quarterly returns, it may issue:

• estimated assessments
• penalties
• interest

These estimates must be corrected by filing the actual missing returns.

6. Risk of a GST/QST Audit

Missed filing periods significantly increase your chances of:

• refund verification
• GST/QST desk audits
• full-scale sales tax audits

Auditors often assume missing filings = risky books.

Can You Change to Annual Filing?

Yes, but only if:

• your annual taxable revenue is below $1.5M, AND
• Revenu Québec approves your change request

You must request the change before the start of the fiscal year.
You cannot retroactively change frequency to avoid penalties.

How to Fix the Problem if You Filed Annually by Mistake

Step 1: File all missing quarterly returns immediately

Even if amounts are the same, you must submit each period separately.

Step 2: Pay any balances owing

This stops interest from accumulating.

Step 3: Respond to notices from Revenu Québec

Missing quarters often create automated warnings.

Step 4: Request a frequency change (if you qualify)

Start fresh next fiscal year with the correct frequency.

Step 5: Establish a filing calendar

Sync with your accounting system to avoid future issues.

Mackisen Strategy

Mackisen CPA helps businesses:

• catch up on missing quarterly/monthly filings
• correct annual filings submitted in error
• negotiate with Revenu Québec
• pursue penalty relief when justified
• adjust filing frequency for future years
• build filing systems to prevent mistakes

Our structured approach cleans your account quickly and reduces future audit exposure.

Real Client Experience

A consulting firm filed annually for three years instead of quarterly. Mackisen reconstructed periods, corrected the filings, and secured partial penalty relief.

A retailer filed annually but owed QST for multiple quarters. Mackisen prepared the missing filings and negotiated a payment plan.

A startup misunderstood its filing obligations. Mackisen switched them to annual filing for the next fiscal year and avoided future issues.

Common Questions

Is annual filing allowed for everyone?
No, only for businesses under $1.5M revenue.

If I filed annually by mistake, can I just leave it?
No, you must file missing periods, or Revenu Québec may estimate amounts.

Will Revenu Québec penalize me?
Yes, unless penalty relief applies.

Can I change my filing frequency now?
Only at the beginning of a fiscal year.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses correct filing frequency mistakes, avoid penalties, and maintain perfect GST/QST compliance.