As a CPA firm, it is vital to have a thorough understanding of the consumption taxes that apply to Québec residents, as these taxes are a significant part of the financial landscape. The two most common consumption taxes are the goods and services tax (GST) and the Québec sales tax (QST). But in Canada, there are three types of sales taxes: PST, GST, and HST. Below is an overview of sales tax amounts for each province and territory.
|Province||Type||PST||GST||HST||Total Tax Rate||Notes:|
|Quebec||GST + *QST||*9.975%||5%||14.975%|
|British Columbia||GST + PST||7%||5%||12%||BC latest Sales tax updates|
|Manitoba||GST + PST||7%||5%||12%||The PST rate was reduced from 8% to 7% on July 1, 2019.|
|Newfoundland and Labrador||HST||15%||15%||The HST rate was raised from 13% to 15% on July 1, 2016.|
|Prince Edward Island||HST||15%||15%|
|New Brunswick||HST||15%||15%||The HST rate increased from 13% to 15% on July 1, 2016.|
|Saskatchewan||GST + PST||6%||5%||11%|
Here’s now what you need to know about Quebec Sales Tax, the ultimate Canada Sales Tax:
What is Quebec Sales Tax – Canada Online Sales Tax?
The Quebec Sales Tax (QST) is a value-added tax that applies to most goods and services sold in the province of Quebec. The current QST rate is 9.975%, which is added to the price of taxable goods and services at the point of sale.
Quebec Sales Tax Registration
Businesses that have sales in Quebec and meet specific criteria must register for QST with the Quebec Ministry of Revenue. The requirements for registration depend on the nature and volume of the business’s activities in Quebec.
Quebec Sales Tax and GST/HST
The Quebec Sales Tax is separate from Harmonized Sales Tax (HST) and the federal Goods and Services Tax (GST). In most cases, the QST is calculated on top of the GST/HST for Canada Sales Tax. However, some goods and services may be exempt from either the QST or the GST/HST.
Rebates and Exemptions to the GST
It’s also essential to understand the rebates and exemptions to the federal GST, as they can impact your clients’ businesses. GST exemptions are classified into two types: explicit exemptions and zero-rated goods and services. The distinction is due to how firms handle costs associated with exemptions, but as a consumer, your clients would not be required to pay GST on items from either category.
Basic groceries, medical devices, feminine hygiene products, prescription drugs, and other items are exempt from GST. Residential resales of property, rental accommodations for more than a month, educational services leading to a certificate or diploma, medical and dental benefits, daycare services, financial services, legal aid services, and other items are directly exempt from GST.
Quebec Revenues from Sales Taxes
Canada sales taxes, including Quebec Sales Tax and GST, comprise a significant portion of Quebec’s and the Canadian government’s budget. Revenue from sales taxes, such as QST, were expected to total $22.118 billion in the 2019 fiscal year, accounting for 23.8% of total Quebec revenue (excluding federal transfers). This amounts to roughly two-thirds of Quebec’s total personal income tax revenue. The 5% GST is expected to generate $40.8 billion in Canada sales tax revenue during the 2019 fiscal year, accounting for 14.2% of total federal tax revenue.
Federal Revenues from Sales Taxes
Sales taxes also contribute to the budget of the Canadian government. During the 2019 fiscal year, the 5% Goods and Services Tax is expected to generate $40.8 billion in tax revenue. This accounts for 14.2% of total federal tax revenue.
The GST is calculated at 5% of the selling price, whereas the QST is calculated at 9.975% of the selling price, excluding the GST. These taxes are collected on most goods and services sold within Québec.
It is worth noting that some provinces have harmonized their sales taxes with the GST, creating a single harmonized sales tax (HST) that replaces both the provincial sales tax and the GST. This applies to participating provinces such as New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island.
In Québec, the administration of the GST/HST is handled by Revenu Québec under an agreement with the federal government. All persons carrying out commercial activities in Québec must register under the GST/HST system and deal with Revenu Québec for all GST- and HST-related matters, including returns, remittances, rebate applications, audits, investigations, interpretation of laws and regulations, notices of objection, tax collection, and unfiled returns.
Quebec Sales Tax Exemptions and Rebates
Most exemptions and rebates to the federal GST also apply automatically to the QST. In addition, there are some exemptions specific to the QST, including books with an International Standard Book Number (ISBN), products for infants, and insurance premiums. However, special taxes on insurance premiums apply in Quebec, where a 9% tax is charged on insurance premiums related to insurance on certain entities or properties.
Quebec First Nations and PST
Quebec follow federal guidelines regarding the exemption of First Nations from sales taxes. The Quebec Sales Tax and the GST/HST will apply to the majority of goods and services sold to First Nations. However, services provided to a First Nations individual on a reserve will be exempt from sales taxes.
Quebec Sales Taxes (QST) on Used Motor Vehicle Sales
If your clients purchase a used car from a dealer, they must pay both the 5% GST and the 9.975% QST on the agreed-upon sales price. If they buy a used car from someone else, they will only have to pay Quebec Sales Taxes (QST) on the greater of the sales price or the vehicle’s estimated value.The QST amount should be paid directly to the Société de l’assurance automobile du Québec (SAAQ) at the time of registration.
Understanding Quebec’s sales tax system is crucial for CPA firms and their clients to navigate the complex tax landscape in Quebec. From exemptions and rebates to special taxes and revenue from sales taxes, it is essential for CPA firms to stay updated with the latest information to ensure compliance and minimize tax liability. Outsourcing sales tax services can be an effective way for CPA firms to manage their clients’ tax compliance needs in Quebec. By partnering with Unison Globus, you can benefit from specialized expertise and knowledge of Quebec’s sales tax system. Outsourcing can also free up valuable time and resources, allowing CPA firms like you to focus on other areas of their business.
In addition, Outsourcing these services to a qualified third-party provider can be a beneficial strategy for CPA firms looking to streamline their operations and focus on their core competencies. By working with a trusted partner, CPA firms can ensure that their clients comply with all GST/HST and QST regulations and requirements while freeing up valuable resources and time to focus on their core business activities.
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