Tax Nightmare Turned to Relief

A Montreal entrepreneur came to Mackisen in a panic they had failed to register for GST/QST on time, missed multiple filing periods, and unknowingly underreported taxable sales for nearly two years. Revenu Québec was beginning to send warning letters, and CRA data-matching suggested a GST audit was imminent. The business owner feared tens of thousands in retroactive taxes, penalties, and interest.

Instead of waiting for an audit, the client used the Voluntary Disclosure Program (VDP)  and the outcome was a complete transformation from tax nightmare to compliance relief.

Here is how the strategy worked.

The Situation: Years of Non-Compliance

The business had:
• exceeded the $30,000 threshold but never registered
• charged customers without remitting GST/QST
• filed no returns for several periods
• mixed personal and business transactions
• missing invoices and inconsistent bookkeeping
• no understanding of zero-rated or taxable sales

Red flags were clear:
• CRA and RQ had mismatched income data
• T4A slips showed business income with no GST account
• deposits exceeded reported revenue on tax returns

The business was exposed to major liability.

Step 1 — Full Reconstruction of Records

Mackisen rebuilt the books completely:
• categorized all sales and expenses
• identified taxable vs. exempt services
• separated personal transactions
• retrieved missing supplier invoices
• reconstructed GST/QST on all taxable sales
• prepared accurate ITC/ITR schedules

This created a complete historical picture.

Step 2 — Calculating Retroactive Tax Exposure

The CPA team calculated:
• GST/QST that should have been collected
• possible penalties
• interest exposure
• impact of voluntary disclosure vs. audit discovery

The numbers showed that VDP was the only safe path forward.

Step 3 — Preparing the Voluntary Disclosure Package

Mackisen drafted:
• a full disclosure letter
• legal explanations supporting eligibility
• corrected FPZ-500-V returns
• detailed GST/QST calculations for all missing periods
• complete documentation packets
• reconciliation schedules

Everything was organized in the exact format RQ and CRA require.

Step 4 — Filing the VDP Application

The disclosure was submitted before any official audit or verification began.
This ensured:
• penalty protection
• reduced interest
• protection from prosecution
• a cooperative not adversaria process

Step 5 — Communication With Revenu Québec and CRA

Mackisen:
• handled all correspondence
• clarified entries and adjustments
• negotiated reductions in interest
• provided supplementary documentation when requested
• ensured the file stayed in the voluntary stream

The business never had to speak to an auditor.

The Outcome

The VDP succeeded:
• all penalties were waived
• interest was significantly reduced
• no audit was initiated
• no prosecution or legal action
• the business became fully registered and compliant
• accurate historical GST/QST returns were filed
• the account was reset and clean

A potentially devastating situation ended with complete relief.

Key Lessons

• Coming forward voluntarily is far safer than waiting for an audit
• The VDP protects against penalties and prosecution
• Missing GST/QST returns can be corrected efficiently
• Reconstruction is possible even after years of non-compliance
• A CPA-led disclosure dramatically increases approval success

Client Quote

“I thought my business was finished. Mackisen rebuilt everything, filed the disclosure, and saved me from penalties. I finally feel free again.”

Common Questions

Can VDP fix years of mistakes?
Yes, it is designed for multi-year corrections.

What if the government already contacted me?
You may no longer qualify for VDP timing is critical.

Can I include both GST and QST in one disclosure?
Yes, especially for Quebec businesses.

Does VDP eliminate tax owing?
No but penalties and legal risk are removed.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal specializes in voluntary disclosures for GST/QST issues. We help businesses fix past mistakes, avoid audits, and return to full compliance with safety and confidence.