Guide To Quebec Sales Tax
Those who conduct commercial activities in Quebec are required to register for both the Goods and Services Tax (GST) and the Quebec Sales Tax (QST). For new business owners, fulfilling these requirements may seem overwhelming at first. Canadian tax law can be complicated and confusing, even for those who operate outside of Quebec and are not subject to the QST. Businesses that are obligated to meet the requirements of the QST may run into even more complications. This guide to Quebec sales tax may answer some of the common questions business owners have.
If you run a business in Quebec and have questions about the QST, or if you are struggling with an assessment on your business related to the QST, GST, or other tax matters, Jeremy Scott Law is here to help. Our Canada tax lawyers are dedicated to helping our clients meet their tax obligations and avoid issues with the Canada Revenue Agency and Revenu Quebec. Contact us today at 902-403-7201 for more information.
GST and QST Requirements in Quebec
In Quebec, the goods and services tax and Quebec sales tax are collected on the sale of most types of goods and services. Some provinces use the harmonized sales tax (HST) as an alternative to the provincial sales tax and the GST. The goods and services tax is calculated as 5 percent of the selling price. According to Revenu Quebec, the Quebec sales tax is calculated as 9.975 percent of the selling price, excluding the GST. These rules are applied based on an agreement between the federal and Quebec governments. Revenu Quebec applies the GST in Quebec based on the rules instituted by the federal government.
Anyone who conducts commercial activities in Quebec must submit an application for registration to Revenu Quebec. After registering, these persons will deal with Revenue Quebec for all matters related to the QST – such as audits, investigations, tax collection, unfiled returns. Quebec based businesses that have registered for GST and HST must collect the HST on sales made in participating provinces, which include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island.
What Businesses Are Required to Register For the GST and QST?
Businesses must register for the GST and QST if they conduct commercial activities in Quebec. To be more specific, businesses must register if the total taxable supplies (which includes sales, rentals, exchanges, transfers, etc.) and those made by their associates are more than $30,000 in a calendar quarter or the four previous calendar quarters.
However, certain types of businesses may still be required to register even if their taxable supplies are under $30,000, including:
- Taxi business operators
- Non-residents who charge admission to the public for activities and events that happen in Quebec
- Tobacco retailers
- Fuel retailers
- Alcoholic beverage vendors
- Those who sell or lease new tires
- Businesses that sell or lease new or used vehicles, other than a vehicle that is the owner’s capital property, for 12 months or longer
In some instances individuals, personal trusts, or partnerships comprised of individuals that conduct business without a reasonable expectation of profit or that supply only tax-exempt property or services is may not be required to register for the GST and QST. For a more detailed guide to Quebec sales tax requirements and how they apply to your business, contact Jeremy Scott Law.
Registrants must collect the GST and QST when they make a taxable sale. There is an exception for zero-rated sales, which are properties and services that have taxable rates of 0 percent. Vendors of taxable goods and services are responsible for billing and collecting the GST and QST from clients and for remitting any tax amount collected to the appropriate tax authority – either the CRA or Revenu Quebec.
Input tax credits (ITCs) and input tax refunds (ITRs) allow registrants to recover the GST and QST they have paid, or will need to pay, on taxable property and services. Inputs are property or services used or consumed during the commercial activities of a business. A business may file ITC or ITR claims if the business was a registrant during the period in which the goods and services tax was paid, or in the period in which the tax became payable.
According to Revenu Quebec, some common business inputs that qualify for ITC and ITR claims include:
- Office furniture
- Computer systems
- Accountant fees
- Taxi fares
- Machine repair costs
- Promotional items
Registered businesses are required to file a GST and QST return for each reporting period, even if the business is not entitled to a refund or has no amount payable. When filing this return, the business must calculate the GST and QST it collected and the GST and QST it was required to collect during the reporting period. Additionally, the business needs to calculate the GST and QST it paid or was required to pay that entitled the business to input tax credits and input tax refunds.
If the difference between these two numbers is positive, that number is the net tax that must be remitted to Revenu Quebec or the CRA. If the difference is negative, that number is the refund the business will receive. In either case, the business must consider any adjustment it has made before the filing deadline.
Running a successful business takes hard work and involves a wide array of responsibilities, including meeting the required province and federal tax obligations. While business owners are free to handle their taxes on their own, the Canadian and Quebec tax systems are complicated, and filing accurate returns can be difficult and time-consuming. This is why many businesses with sales in Quebec turn to the services of tax lawyers for assistance. At Jeremy Scott Law, our tax lawyers help Canadian businesses handle all of their taxes so that they can focus on the other important aspects of running their business. For more information related to our guide to Quebec sales tax or other tax matters, contact us today at 902-403-7201.
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Please note the content above and throughout this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. I urge you to seek specific legal advice by contacting me (or your current legal counsel) regarding any legal issues you may face. I do not warrant or guarantee the quality, accuracy or completeness of any information found on this website and will not be held liable for anything contained in this document or any use you make of it. Finally, accessing the information on my website does not create a lawyer-client relationship.