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MEMO FOR STARTUP BUSINESSES QST AND GST/HST

About this content

This content is a simplified rewording of the official publication of Revenu Quebec: IN-256(2025-03).pdf, produced to help citizens and entrepreneurs better understand their tax obligations. It does not constitute legal or tax advice. Refer to the official document for any decision.

Who this document is for​

This document is intended for startup businesses carrying on commercial activities in Canada or Quebec and that need to understand their main obligations related to the goods and services tax/harmonized sales tax, namely GST/HST, and to the Quebec sales tax, namely QST. It is intended in particular for:

  • businesses that begin selling taxable goods or services;
  • businesses that must determine whether they must register for GST/HST and QST accounts;
  • businesses already registered that must collect, report and remit the taxes;
  • individuals who operate a business;
  • businesses that make sales in Quebec, elsewhere in Canada or outside Canada;
  • businesses that want to understand the recovery of taxes paid on purchases related to their business activities;
  • businesses that must choose or comply with a filing frequency;
  • businesses that must keep their records and supporting documents;
  • businesses that wish to amend their registration, authorize another person to act for them or change the legal status of their business.

Context and objective​

This publication is a memo prepared by Revenu Quebec, in collaboration with the Canada Revenue Agency, to explain the general rules applicable to QST and GST/HST for startup businesses. It is part of the tax obligations arising notably from the Excise Tax Act and the Act respecting the Quebec sales tax. However, the information presented in the publication is provided for information purposes only and does not constitute a legal interpretation of those Acts or of any other Act. The document presents the essential elements that a business starting its activities must know, including:

  • registration for tax accounts;
  • the situations in which a business must collect GST/HST and QST;
  • the applicable rates for taxable sales;
  • the basic rules for sales made in Quebec, elsewhere in Canada or outside Canada;
  • the possibility of recovering certain taxes paid on business purchases;
  • the filing frequency for returns;
  • filing and payment deadlines;
  • the quick method of accounting;
  • the records, documents and forms to keep or produce;
  • the steps to take in the event of a change, cancellation or change in status of the business.

Complete and detailed information​

Registration for GST/HST and QST accounts​

A business carrying on commercial activities in Canada must normally register for the GST/HST account, unless it is considered a small supplier. Likewise, a business carrying on commercial activities in Quebec must normally register for the QST account, unless it is considered a small supplier. Even when a business is a small supplier, it may choose voluntarily to register for GST/HST and QST accounts.

Definition of small supplier​

A business is considered a small supplier when the total of its taxable sales, including zero-rated sales, plus the taxable sales of its partners, does not exceed $30,000:

  • during a given calendar quarter;
  • nor for the entire four preceding calendar quarters. Some persons who meet the small supplier criteria must nevertheless register for GST/HST and QST accounts. The document refers to the publication Registration for Revenu Quebec Accounts (IN-202) for more details on this subject.

Ways to register​

Registration can be done in two ways:

  • by using the online service Register a Startup Business;
  • by completing the form Application for Registration (LM-1).

Collecting GST/HST and QST​

When a business is registered for GST/HST and QST accounts, it must collect the taxes when it makes taxable sales. This obligation applies each time a taxable sale is made, according to the rules applicable to the place where the sale is made.

Sales made in Quebec​

When a registered business makes a taxable sale in Quebec:

  • it must collect GST at the rate of 5%;
  • it must collect QST at the rate of 9.975%;
  • it must calculate each of these taxes on the sale price;
  • it must inform its client that GST and QST apply to the sale.

Example of calculation for a taxable sale in Quebec​

For a taxable item sold for $100.00:

ElementCalculationAmount
Sale price-$100.00
GST$100 x 5%$5.00
QST$100 x 9.975%$9.98
Total payable$100.00 + $5.00 + $9.98$114.98

In this example, the total billed to the client is therefore $114.98.

Information to provide on invoices and supporting documents​

The publication indicates that rules exist concerning:

  • the collection of taxes;
  • the information to enter on invoices;
  • the information to enter on other supporting documents given to clients. For these elements, the document refers to the publication General Information on QST and GST/HST (IN-203).

Sales made in Canada, but outside Quebec​

When a sale is made in Canada outside Quebec, the business must apply the rules relating to GST or HST depending on the province where the sale is deemed to be made. HST applies in the following provinces:

  • Ontario;
  • Newfoundland and Labrador;
  • New Brunswick;
  • Prince Edward Island;
  • Nova Scotia. The HST rate varies depending on the province concerned. The publication specifies that the rates applicable to each of these provinces can be consulted on the Revenu Quebec website.

Evidence to keep for sales outside Quebec​

When a sale is made outside Quebec, the business must keep sufficient evidence to show that the sale was indeed made outside Quebec. The document gives the following example of possible evidence:

  • the carrier's bill of lading.

Sales made outside Canada​

When a sale is made outside Canada, the general rule is that no tax must be collected.

The business must nevertheless keep sufficient evidence showing that the sale was made abroad. The document mentions the following examples in particular:

  • proof of delivery;
  • export documents.

Recovery of GST/HST and QST paid​

A registered business can generally recover the taxes paid on goods and services acquired for its business activities. Under the GST/HST system, this recovery takes the form of input tax credits, or ITCs. Under the QST system, it takes the form of input tax refunds, or ITRs.

Taxes that can generally be recovered​

A registered business may, as a rule, claim:

  • ITCs for GST/HST paid on goods and services acquired in the course of its business activities;
  • ITRs for QST paid on goods and services acquired in the course of its business activities.

For a business to be entitled to ITCs and ITRs, certain information must appear on the invoices issued by its suppliers. The document refers to the publication General Information on QST and GST/HST (IN-203) to find out the specific requirements relating to that information.

Calculating taxes included in a price​

When GST and QST are already included in the displayed or paid price, the business can determine the amount of tax included using the following formulas:

Tax to extract from the tax-included priceFormula
GSTSale price including taxes x 5 / 114.975

| QST | Sale price including taxes x 9.975 / 114.975 | These formulas make it possible to isolate the GST and QST amounts contained in a total price that already includes the taxes.

Filing frequency​

A registered business may file its tax returns on a frequency:

  • monthly;
  • quarterly;
  • annually. The filing frequency is established when registering for GST/HST and QST accounts. This frequency is assigned according to the expected annual total of taxable sales made in Canada. The taxable sales of partners are also taken into account, where applicable.

Possibility of changing the filing frequency​

A business may choose a different frequency than the one assigned, when the rules permit it. This choice can be made:

  • at the time of registration for tax accounts;
  • later, by completing the form Election to Change the Filing Frequency for GST/HST and QST (FP-2620).

Assigned frequencies and possible choices​

Annual taxable salesAssigned frequencyOther possible frequency
$1,500,000 or lessAnnual, with or without instalment paymentsMonthly or quarterly
More than $1,500,000 to $6,000,000QuarterlyMonthly
More than $6,000,000MonthlyNo other frequency possible

Filing the GST/HST and QST return and paying the taxes​

A registered business must file a GST/HST and QST return even if the amounts to report are:

  • positive;
  • negative;
  • zero. In other words, the obligation to file a return exists even when no net tax is payable or when a refund is expected.

Filing and payment deadlines according to filing frequency​

When the filing frequency is monthly or quarterly, the return and the payment of taxes, if there is an amount to pay, must be received no later than one month after the last day of the period covered. When the filing frequency is annual, the return must be received no later than three months after the end of the fiscal year.

Special rule for certain individuals operating a business​

A special rule applies when a person meets all of the following conditions:

  • they are an individual;
  • they operate a business;
  • their filing frequency is annual;
  • their fiscal year ends on December 31. In this situation:
  • the return may be filed up to June 15 of the following year;
  • any GST or QST amount owing must nevertheless be paid no later than April 30 in order to avoid interest.

Calculating the balance payable or refund​

When preparing the return, the business may subtract its ITCs and ITRs from the GST/HST and QST amounts it must report. The result makes it possible to determine whether the business has:

  • a balance payable, when the result is positive;
  • a refund to receive, when the result is negative.

Mandatory electronic filing or online service​

The tax return must be transmitted:

  • by means of Revenu Quebec's online services;
  • or by means of the online service of a financial institution that allows the return to be filed and the balance to be paid in a single transaction. This option through a financial institution does not apply to charities.

Mandatory electronic payment starting at $10,000​

When the amount of GST or QST to remit is $10,000 or more, the payment must be made electronically. The publication gives the following examples of electronic methods:

  • Internet;
  • a financial institution. This obligation does not apply when it is not reasonably possible for the business to make the payment in this way.

Quick method of accounting​

The quick method of accounting may be advantageous for certain eligible businesses. It allows the amount of GST/HST or QST to be remitted to be calculated differently.

Applicable thresholds​

The choice of the quick method of accounting could be relevant if, during four consecutive fiscal quarters included in the five most recent fiscal quarters, the business's total annual worldwide taxable sales do not exceed:

  • $400,000, GST and HST included, for the application of GST;
  • $418,952, QST included, for the application of QST.

Sales included in the threshold calculation​

The total to consider includes:

  • taxable sales;
  • zero-rated sales;
  • sales made by the business's partners.

Conditions and resources mentioned​

Use of the quick method remains subject to certain eligibility criteria. The publication refers to the publication General Information on QST and GST/HST (IN-203) for more information. It also mentions the existence of a calculation tool entitled Quick Method of Accounting - Tax Remittance Reduction Estimation Tool, available on the Revenu Quebec website.

Form to file to use or revoke the quick method​

To choose the quick method of accounting to calculate the GST/HST or QST to be remitted, the business must:

  • complete the form Election or Revocation of an Election to Use the Quick Method of Accounting (FP-2074);
  • sign this form;
  • send it to Revenu Quebec.

Records, supporting documents and administrative information​

A registered business must record the tax amounts:

  • that it collects;
  • that it pays; in the course of its business activities. It must also keep its records and all supporting documents that back up the information contained in those records.

Retention period for records​

The records and supporting documents must be kept for six years after the end of the year to which they relate.

Numbers to indicate in correspondence​

When a business sends correspondence to Revenu Quebec, it must include:

  • its GST/HST account number;
  • its QST identification numbers;
  • its QST file numbers.

Copies of documents submitted​

The business must keep a copy of each document it sends to Revenu Quebec.

Signing of documents​

Documents sent to Revenu Quebec must always be signed. If the business wants to allow another person, for example its accountant, to sign documents on its behalf, make changes in its file or obtain information concerning that file, it must:

  • complete the form Authorization to Communicate Information or Power of Attorney (MR-69);
  • sign this form;
  • send it to Revenu Quebec.

Changing or cancelling the registration​

When a business wants to cancel or amend its registration for Revenu Quebec accounts, it must:

  • complete the form Application for Cancellation or Modification of Registration (LM-1.A);
  • sign this form;
  • send it to Revenu Quebec.

Change in the business's status​

When a business changes status, for example when it changes from a sole proprietorship to a corporation, it must obtain:

  • a new GST/HST account number;
  • new QST identification numbers;
  • new QST file numbers. It must also request the cancellation of the registration of the former entity.

Online services for businesses​

The publication indicates that most online services intended for businesses are accessible in My Account for Businesses.

This secure space allows businesses in particular:

  • to fulfill their tax obligations;
  • to manage their file online.

English version of the publication​

The publication is also available in English under the title Information for New Businesses: QST and GST/HST (IN-256-V).

Collaboration with the Canada Revenue Agency​

The document indicates that it was prepared in collaboration with the Canada Revenue Agency.

Special cases and exceptions​

Small supplier registered voluntarily​

Even if a business is considered a small supplier, it may still choose to register for GST/HST and QST accounts. Once registered, it must comply with the obligations applicable to registrants, including collecting taxes on taxable sales and filing returns.

Small supplier who must still register​

The document specifies that some persons may meet the definition of small supplier while still being required to register for GST/HST and QST accounts. Further details on these situations are presented in the publication Registration for Revenu Quebec Accounts (IN-202).

Sales outside Quebec​

When a sale is made elsewhere in Canada, the business must apply the GST or HST rules depending on the province where the sale is made. QST does not apply in the same way as for a taxable sale made in Quebec. The business must keep proof showing that the sale was made outside Quebec.

Sales outside Canada​

For a sale made outside Canada, the general rule is that no tax is collected. However, the business must keep documents showing that the sale was indeed made abroad.

Charities​

The option of using the online service of a financial institution to file the return and pay the balance in a single transaction does not apply to charities.

Electronic payment of $10,000 or more​

A GST or QST payment of $10,000 or more must be made electronically, unless the business cannot reasonably make the payment in this way.

Individual operating a business with a fiscal year ending on December 31​

An individual who operates a business, files annually and whose fiscal year ends on December 31 benefits from a filing deadline up to June 15 of the following year. However, GST or QST amounts owing must be paid no later than April 30 to avoid interest.

Business that changes status​

A change in legal status, such as the transition from a sole proprietorship to a corporation, creates the obligation to obtain new tax numbers and to have the former entity's registration cancelled.

Quick method of accounting​

The quick method is presented only as a potentially advantageous option. It is subject to eligibility criteria. The thresholds to be respected are:

  • $400,000, GST and HST included, for GST;
  • $418,952, QST included, for QST. These thresholds are assessed on the basis of worldwide taxable sales, including zero-rated sales and sales of partners, during four consecutive fiscal quarters included in the five most recent fiscal quarters.

Steps and procedures​

Registering for GST/HST and QST accounts​

To register, the business must use one of the following options:

  1. Use the online service Register a Startup Business;
  2. Complete the form Application for Registration (LM-1). Registration is normally required when the business carries on commercial activities:
  • in Canada, for GST/HST;
  • in Quebec, for QST; unless it is a small supplier or a special rule applies.

Collecting taxes on taxable sales​

When it is registered, the business must:

  1. determine whether the sale is taxable;
  2. determine the place where the sale is made;
  3. apply the rules corresponding to that place;
  4. collect the applicable taxes;
  5. inform the client that the taxes apply;
  6. keep the necessary supporting documents. For a taxable sale in Quebec, it must:
  • calculate GST at 5% on the sale price;
  • calculate QST at 9.975% on the sale price.

Keeping proof according to the place of sale​

For a sale made in Canada outside Quebec, the business must keep satisfactory proof that the sale was made outside Quebec. Example mentioned:

  • the carrier's bill of lading.

For a sale made outside Canada, the business must keep satisfactory proof that the sale was made abroad. Examples mentioned:

  • proof of delivery;
  • export documents.

Claiming ITCs and ITRs​

To recover the taxes paid on purchases related to its business activities, the registered business must:

  1. keep the invoices from its suppliers;
  2. ensure that the required information appears on those invoices;
  3. calculate the ITCs for eligible GST/HST;
  4. calculate the ITRs for eligible QST;
  5. enter those amounts in its tax return.

Determining the taxes included in a price​

When a price already includes taxes, the business can extract the tax amounts by applying the following formulas:

  • GST = sale price including taxes x 5 / 114.975;
  • QST = sale price including taxes x 9.975 / 114.975.

Changing the filing frequency​

To choose another permitted filing frequency or to change the existing frequency, the business must use the form:

  • Election to Change the Filing Frequency for GST/HST and QST (FP-2620). This choice can be made at the time of registration or later.

Filing the return and paying the taxes​

The registered business must:

  1. file a GST/HST and QST return even if the result is zero, positive or negative;
  2. calculate the taxes collected or to be reported;
  3. deduct eligible ITCs and ITRs;
  4. determine whether it has a balance payable or a refund to receive;
  5. send the return electronically or through the eligible service of a financial institution;
  6. pay the balance, if any, within the applicable deadline.

Deadlines to respect​

Filing frequencyFiling and payment deadline
MonthlyNo later than one month after the last day of the period covered
QuarterlyNo later than one month after the last day of the period covered
AnnuallyReturn to be received no later than three months after the end of the fiscal year
Individual operating a business, annual frequency, fiscal year ending on December 31Return no later than June 15 of the following year; taxes owing to be paid no later than April 30 to avoid interest

Making a mandatory electronic payment​

If the amount of GST or QST to remit is $10,000 or more, the business must pay electronically, unless it is reasonably impossible. The electronic payment examples mentioned are:

  • Internet;
  • a financial institution.

Choosing or revoking the quick method of accounting​

To use the quick method of accounting to calculate the amount of GST/HST or QST to be remitted, the business must:

  1. verify whether it meets the eligibility criteria;
  2. verify the applicable sales thresholds;
  3. complete the form Election or Revocation of an Election to Use the Quick Method of Accounting (FP-2074);
  4. sign the form;
  5. send the form to Revenu Quebec.

Keeping and retaining records​

The registered business must:

  1. record the amounts of tax collected;
  2. record the amounts of tax paid;
  3. keep the records;
  4. keep all supporting documents backing up the records;
  5. keep these documents for six years after the end of the year concerned.

Authorizing another person to act in the file​

If the business wants another person, for example its accountant, to be able to sign documents, modify its file or obtain information about that file, it must:

  1. complete the form Authorization to Communicate Information or Power of Attorney (MR-69);
  2. sign the form;
  3. send the form to Revenu Quebec.

Cancelling or modifying a registration​

To cancel or modify its registration for Revenu Quebec accounts, the business must:

  1. complete the form Application for Cancellation or Modification of Registration (LM-1.A);
  2. sign the form;
  3. send the form to Revenu Quebec.

Changing the business status​

When a business changes status, for example by changing from a sole proprietorship to a corporation, it must:

  1. obtain a new GST/HST account number;
  2. obtain new QST identification numbers;
  3. obtain new QST file numbers;
  4. request the cancellation of the registration of the former entity.

Important warnings​

  • A registered business must file a GST/HST and QST return even if no amount is payable or even if it is entitled to a refund.
  • Taxes owing must be paid within the applicable deadlines, failing which interest may apply.
  • For an individual operating a business with an annual frequency and a fiscal year ending on December 31, the filing deadline may extend up to June 15, but amounts owing must be paid no later than April 30 to avoid interest.
  • GST or QST payments of $10,000 or more must be made electronically, unless this payment method cannot reasonably be used.
  • Proof of sales outside Quebec or outside Canada must be kept, since it serves to show that the special rules for those sales apply.
  • Supplier invoices must contain certain information to allow ITCs and ITRs to be claimed.
  • Records and supporting documents must be kept for six years after the end of the year concerned.
  • Any correspondence sent to Revenu Quebec must include the appropriate tax numbers, namely the GST/HST account number as well as the QST identification and file numbers.
  • The business must keep a copy of any document submitted.
  • Submitted documents must be signed.
  • An outside person, such as an accountant, may only be authorized to sign, modify the file or obtain information if the form MR-69 is completed, signed and submitted.
  • A change or cancellation of registration requires the form LM-1.A.
  • A change in the business's status may require new tax numbers and the cancellation of the former entity's registration.
  • The quick method of accounting is not automatically available to all businesses: it depends on specific thresholds and eligibility criteria.
  • The official document specifies that its content is provided for information purposes only and does not constitute a legal interpretation of the Excise Tax Act, the Act respecting the Quebec sales tax or any other Act.

Summary​

Startup businesses carrying on commercial activities in Canada or Quebec must generally register for GST/HST and QST accounts, unless they are small suppliers, meaning that their taxable sales and those of their partners do not exceed $30,000 according to the prescribed periods. Once registered, they must collect taxes on taxable sales, notably 5% GST and 9.975% QST for sales in Quebec. Sales elsewhere in Canada follow the GST or HST rules depending on the province, while sales outside Canada generally do not give rise to any tax, provided the appropriate proof is kept. Registered businesses can usually recover taxes paid on their business purchases through ITCs and ITRs, if the invoices contain the required information. Returns may be monthly, quarterly or annual depending on annual taxable sales, with thresholds of $1,500,000 and $6,000,000 used to determine the assigned frequencies. Returns must be filed even if the amounts are zero, positive or negative, and payments of $10,000 or more must generally be made electronically. Businesses must keep their records and supporting documents for six years after the end of the year concerned. Any significant change, such as a change in frequency, the quick method, a power of attorney, a cancellation of registration or a change in status, requires the appropriate form.