It is one of the first obligations of a Québec business, and one of the most often postponed. While sales stay modest the question looks theoretical. The day the threshold is crossed, it no longer is.
The rules fall under Revenu Québec for the QST and the Canada Revenue Agency for the GST, with a Québec particularity: Revenu Québec generally administers both for businesses here.
When the obligation arises
The obligation to register arises when your total taxable supplies exceed the small supplier threshold over a reference period. Below it, you remain free to register or not.
Two points matter. The calculation covers taxable supplies worldwide, not only Québec ones. And certain activities, including transporting passengers by taxi or limousine, trigger an obligation to register from the first dollar.
The applicable threshold and the calculation period are published by the authorities and should be verified at the moment the decision is made, since they may be adjusted.
Why register before you have to
Voluntary registration is often the right reflex at start-up, for one simple reason: it gives access to input tax credits.
A business that buys equipment, pays professional fees or fits out premises before its first sale bears tax on all of those expenses. Registered, it recovers them. Unregistered, it absorbs them.
The calculation therefore weighs the amount of tax recoverable on your expenses against the administrative burden of periodic returns.
What registration requires of you
Registering means becoming a collector on behalf of the state. Three obligations follow.
Collect
Charge the applicable taxes on your taxable supplies, showing your registration numbers on the invoices. An invoice without a registration number does not allow your client to claim his own credits.
Report and remit
File returns at the frequency assigned to you, monthly, quarterly or annually depending on your turnover, and remit the difference between what you collected and what you claim.
Keep records
Keep the books and supporting documents for the prescribed period. On audit, a missing document means the credit claimed is denied.
The mistakes that cost money
Three come up constantly in the files we see.
Charging tax without being registered. The amount collected must be remitted, and the business is entitled to no input credit for the period before registration.
Not charging when the obligation had already arisen. The taxes remain owing and come out of the margin, since it is rarely possible to go back and invoice clients months later.
Mishandling sales outside Québec. The place of supply and the status of the client determine the treatment, and a systematic error multiplies across hundreds of invoices before it is caught.
Where registration falls in the sequence
Registration for the GST and QST files comes after the company is incorporated and registered with the Registraire des entreprises du Québec, but before the first invoice.
For a company incorporated under Québec’s Business Corporations Act, registration with the enterprise registrar is automatic on incorporation. For a federal company incorporated with Corporations Canada under the Canada Business Corporations Act, registration in Québec is a separate step that is easy to forget.
This is one of the reasons the start-up sequence is planned rather than improvised.
Frequently asked questions
At what amount do you have to register?
The obligation arises when your total taxable supplies exceed the small supplier threshold over a given period. The threshold and its calculation are published by Revenu Québec and the Canada Revenue Agency; they should be verified when the question arises rather than from memory.
Can you register before reaching the threshold?
Yes, and it is often advantageous. Voluntary registration allows input tax credits to be claimed from the first expenses, which matters when start-up requires significant purchases before the first sales.
What happens if you pass the threshold without registering?
You remain required to collect and remit the taxes from the moment the obligation arose, even if you did not charge them. The amount then comes out of your margin, with the applicable interest and penalties.
Do you need two separate registrations?
In Québec, Revenu Québec generally administers both the GST and the QST for Québec businesses, which allows a single registration with a single point of contact. Certain situations, notably financial institutions, follow particular rules.
Do the taxes apply to sales outside Québec?
The treatment depends on the place of supply and the status of the client. A sale abroad, to another province or to a registered client is not treated the same way. This is one of the most frequent sources of error in growing businesses.
Doing things in the right order
Tax registrations are a standardized step with a predictable cost. The firm handles them at a fixed price. What calls for advice, the start-up sequence, the ownership structure and the treatment of sales outside Québec, stays with the firm.
Going further: incorporation and structuring, federal or provincial incorporation, and partnership, corporation or self-employment.
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Lawyer, member of the Barreau du Québec since 2014, founder of MEKA AVOCAT. This text sets out general legal information: it describes rules that apply broadly, not the answer to one particular case, and does not replace advice on your situation.
