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Sales Taxes -> QC Amended QST
GST/HST -> QC Amended QST

Québec Harmonized Sales Tax (Amended QST) Proposal

On September 30, 2011 Canada and Québec signed a Memorandum of Agreement (MOA) regarding the harmonization of the Québec Sales Tax (QST) with the Goods and Services Tax (GST). The agreement reflects a commitment by both parties to negotiate a Canada-Québec Comprehensive Integrated Tax Coordination Agreement (CITCA), which would set out the terms of the harmonization.

The current GST rate is 5%. The current QST rate is 8.5%, scheduled to increase to 9.5% on January 1, 2012.

Some key components of the MOA:

	Québec will continue, generally, to administer the QST and the GST/HST in Québec, and the QST will continue to be legislated by Québec.
	The proposed implementation date for the Amended QST is January 1, 2013.
	The tax rules and tax bases for GST and QST will be harmonized, which will make things much easier for businesses.
	Québec will undertake to discontinue charging QST on the GST (tax on tax).
	Québec may increase or decrease the QST rate.
	Canada will make payments totalling $2.2 billion to Québec, with $733 million of this paid on the first business day following implementation date, and the remaining $1,467 million one year later, provided the Amended QST continues to remain in place.
	Québec undertakes to mirror under the QST legislation the place of supply rules under the GST/HST legislation, and the rules in respect of financial services and financial institutions under the GST/HST legislation.

Québec has certain measures under the QST that currently deviate from the GST/HST, and may continue to deviate. These measures are:

	Administrative measures under Quebec’s Tax Administration Act.
	Zero-rating of motor vehicles acquired for re-supply and collection of the QST at the retail level by the Société de l'assurance automobile du Québec.
	Anti-avoidance rule for the purposes of calculating the QST payable regarding a used road vehicle.
	Measures applicable to the operators of flea markets.
	Measures applicable to clothing manufacturers.
	Measures applicable to the operators of establishments providing restaurant services.
	Mandatory registration of certain small suppliers and of certain persons not residing in Quebec and not carrying on a business there.
	The application of the tax to road vehicles supplied otherwise than in the course of commercial activities.
	The compensation to the municipalities of Laval, Montréal and Québec for the repeal of the amusement tax.

The Amended QST base may deviate from the GST/HST base provided that the absolute value of the deviations does not exceed 5% of the estimated GST base for Québec. There are certain measures already implemented by Québec, which represent a deviation 3% of the estimated GST base. These measures are:

	Zero-rating of tobacco.
	Zero-rating of books.
	Zero-rating of diapers for children and items used for bottle-feeding or breast-feeding.
	Zero-rating of admission to a non-foreign convention sold by the convention sponsor to a non-resident participant.
	Zero-rating of passenger transportation services from Quebec to another province with transfer to another conveyance outside Canada.
	Zero-rating of inter-provincial services of ferrying by watercraft of motor vehicles and passengers between parts of a road or highway system separated by a stretch of water.
	Zero-rating of inter-provincial air ambulance services.
	Transitional exemptions for the Mohawks of Kahnawake.
	Non-taxation of certain properties and services supplied by municipalities due to the fact that these inputs were not eligible for any rebate.
	Rebate of the tax paid by certain international organizations.
	Rebate of the tax paid regarding automatic door openers for handicapped persons.
	Rebate of the tax paid regarding a pleasure boat temporarily brought into Quebec for winter storage.
	Taxation by self-assessment of food products intended for making wine or beer.
	Non-rebate of the tax paid regarding short-term accommodations or camping accommodations included in a tour package.
	Easing of the self-supply rule for a single unit residential complex or a residential unit held in co-ownership.

Department of Finance information:

Memorandum of Agreement Concerning a Canada-Québec Comprehensive Integrated Tax Coordination Agreement

Revised: October 01, 2011

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Sales Taxes -> QC Amended QST GST/HST -> QC Amended QST

Québec Harmonized Sales Tax (Amended QST) Proposal

Sales Taxes -> QC Amended QST
GST/HST -> QC Amended QST