Generally, the goods and services tax ( GST) and the Québec sales tax ( QST) are applicable to most goods and services. The GST and QST are collected at each step of the production and marketing process of a good or service. The majority of transactions that take place in Canada are subject to the GST, at 5% since January 1, 2008. In addition, transactions that take place in Québec are subject to the QST as well, at 9.975%.
Regarding supplies (see Definitions) before January 1, 2008, the rate of 5% applies only if the tax was paid or was payable after December 31, 2007. Otherwise, the 6% rate is applicable, which was in effect from July 1, 2006 to December 31, 2007.
As for the QST, it is applied to the sales price, including the GST amount.
Goods and services subject to GST and QST
1. Foods and beverages (goods and services at the grocery store) Foodstuffs purchased at a grocery store to be consumed at home are generally zero-rated items (see Definitions). However, certain foods are taxable, as follows:
2. Arts and culture Supplies related to the arts and culture are taxable. However, certain supplies are exempt (see Definitions), such as:
3. Fuel The sale of fuel is GST and QST taxable. In addition, in Québec, fuel tax is applied to fuel sold other than for resale. That tax is set according to the type of fuel, the region and the date of acquisition.
4. Health care institutions Generally, there are no taxes on:
The taxes apply to the provision by a health care institution of services that are unrelated to health, such as parking and meals for visitors or staff.
5. Educational institution The services of an educational institution providing teaching services, extra-curricular activities for elementary- or secondary-school students and diploma courses are GST and QST exempt.
However, provision of the following goods and services is taxable:
Note Meals eaten at the cafeteria of an elementary or secondary school are GST and QST exempt only if the cafeteria mainly serves meals to elementary- or secondary-school students.
6. Motor vehicles The sale of motor vehicles, motorcycles or all-terrain vehicles, whether new or used, is subject to QST. It is also subject to GST, except in the case of the sale of a used vehicle between individuals.
7. City hall In general, provision of services by a city or municipality is tax exempt.
However, the provision of certain services considered as commercial activities (tree pruning, snow removal from private land, parking meters, municipal parking, etc.) is subject to GST and QST.
8. Real estate Acquisition of new or substantially renovated housing entitles the purchaser to a GST and QST rebate.
In the case of the purchase of land or a building (for commercial or residential purposes) by a non-resident, it is preferable to contact Revenu Québec.
9. Financial institutions The provision of the following financial services is zero-rated for QST purposes and exempt for GST purposes:
Certain professional and administrative services are taxable ( GST and QST), for example the rental of a safety deposit box.
10. Books The sale of printed books and audio books is GST taxable only, since these items are zero-rated in the case of the QST.
The following organizations are entitled to a full reimbursement (100%) of the GST paid on books and periodicals (with the exception of magazines, newspapers, catalogues and other promotional material):
11. Flea markets A merchant who makes taxable sales of new or used merchandise in a public place, such as flea markets, auctions or exhibitions, is required to collect the GST and QST and to remit these to Revenu Québec, unless the merchant is considered to be a small supplier (see Definitions) whose annual taxable sales do not exceed $30,000.
12. Insurance premiums Insurance premiums are tax exempt under the GST and zero-rated under the QST.
However, they are subject to an insurance premium tax of 9%; in the case of automobiles, the insurance premium rate is 5% and in the case of tax-exempt premiums, the tax is not applicable.
The premiums for the insurance of persons (covering the life, physical integrity or health of the insured, in particular critical illness, disability and hospitalization) are exempt from the insurance premium tax.
13. Care for young children The following goods are zero-rated under the QST, but taxable under the GST:
Restrictions Taxable under the QST and the GST:
14. Telecommunications GST and QST are applied to telecommunication services, for example a subscription to a fax service, long-distance calls, the installation or rental of a telephone, etc.
15. Tourism GST and QST are payable in the following cases:
16. Passenger transportation Generally, GST applies to:
QST applies to:
Taxi drivers must collect both taxes.
Note This fact sheet discusses certain important particularities that affect consumers. However, its content is not exhaustive.
Commercial activity Any activity that is engaged in for the purpose of making taxable sales.
Corporeal personal property All objects or things that may be perceived by the senses and are movable at the time of supply: a vehicle, animals, furniture, etc.
Small supplier A person whose annual taxable sales do not exceed $30,000 for the current calendar quarter or the 4 preceding calendar quarters. This refers to the worldwide sales made by the person and his or her associates during that period.
A person is generally no longer considered a small supplier immediately after the end of the calendar month following the 4 calendar quarters in which he or she exceeds the threshold amount.
Supply (sales or rentals) Under the goods and services tax ( GST) and the Québec sales tax ( QST), supply means the provision of property or a service in any way, including sale, barter, exchange, transfer, licence, rental, lease, disposition and gift. Consequently, the term refers to the transaction, and not the good or service that is the object of the transaction.
Note Supplies provided electronically are considered as services or as incorporeal moveable property.
There are 3 types of supplies under the GST and QST:
It is important to determine the type of supply involved when concluding a transaction, as this establishes whether or not GST and QST must be collected.
Taxable supplies (taxable sales or rentals) Supplies of goods or services subject to GST or QST include all supplies that are provided in the course of a commercial activity, such as:
Zero-rated supplies (zero-rated sales or rentals) Supplies that are taxed at 0% include:
However, the provision of certain professional and administrative services by financial institutions is subject to GST and QST.
Exempt supplies (zero-rated sales or rentals) No taxes are collected or paid for exempt supplies, as these are not subject to GST or QST.
Exempt supplies include:
Zero-rated vs. exempt supplies (sales or rentals) Although these terms are different, from the consumer’s standpoint both involve a break from the particular tax ( QST or GST).
The difference between these terms has an impact for Revenu Québec registrants (merchants), who may or may not claim an input tax credit, depending on whether the supply is zero-rated or exempt.
Definition and impact of exempt and zero-rated Exempt means exempt from all taxes. Consequently the merchant cannot claim an input tax credit.
Zero-rated means taxed at 0%. Thus, the merchant can claim an input tax credit.
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