The governments of Canada and Québec have entered into an agreement to better harmonize the Québec sales tax (QST) system with the goods and services tax (GST) system. As a result, the following changes will be made to the QST system.
Calculation of the QST at a rate of 9.975% on an amount excluding GST
On January 1, 2013, the QST system will be changed so that the QST will no longer be calculated on amounts including the GST. At the same time, the current QST rate of 9.5% will increase to 9.975%.
Tax-exempt financial services
On January 1, 2013, financial services, which are currently zero-rated under the QST system, will, in general, become exempt as under the GST/HST system.
As a result, all the special rules governing the exemption of financial services under the GST/HST system will be introduced into the QST system, including:
- the special rules for calculating input tax credits;
- the relief rule for transactions within a closely related group including a listed financial institution;
- the special attribution method applicable to selected listed financial institutions;
- the specific rules for imported supplies of services and incorporeal movable properties;
- the rules for registration and the filing of returns and information.
In addition, a set of transitional rules will take effect to ensure the proper passage, as of January 1, 2013, from a system where financial services are zero-rated to one where most of them are exempt.
Finally, the special rules regarding the zero-rating of financial services under the QST system will become obsolete and will thus be eliminated. Likewise, the compensation tax for financial institutions will be partially eliminated.
Payment of the QST by governments and their mandataries
As of April 1, 2013, the federal and Québec governments and their mandataries will have to pay the QST on purchases of taxable goods and services. Those that are currently exempt from paying the QST will be able to subsequently claim a refund of the QST paid from Revenu Québec.
- As of April 1, 2013, the Québec government and its mandataries will have to pay the GST/HST on purchases of taxable goods and services. Those that are currently exempt from paying the GST/HST will be able to subsequently claim a refund of the GST/HST paid from the Canada Revenue Agency.
For more information, see information bulletin 2012-04, published onMay 31, 2012, by the Ministère des Finances du Québec.