New QC Sales Tax

New Mandatory Registration for Quebec Sales Tax (QST)

Eric Svoboda, B.C.L., LL.B., Attorney
New QC Sales Tax

Suppliers outside of Québec, be prepared for the new Mandatory Registration for Quebec Sales Tax (QST)

Under the “new specified registration system” proposed in Quebec’s March 2018 Budget, non-residents of Quebec, which supply services, incorporeal moveable property or tangible moveable property to Specified Quebec consumers, will be required to register for and to collect QST should they exceed a threshold of $30,000 of such sales made in Québec. Specified Québec consumers are individuals resident in Québec who are not registered for the purpose of the application of the QST.

Under the current regime, sales made in Quebec by a non-resident of Quebec are deemed to be made outside of Quebec for the purpose of the application of the QST unless the non-resident carries on business in Québec (“the non-resident over-ride rule”). Carrying on business in Québec requires a certain level of presence in the province. The new QST registration system will disregard the non-resident over-ride rule in the context described above, where sales of services and properties are made directly to Québec consumers.

These changes were meant to affect global suppliers of digital content such as Netflix, global suppliers of tangible goods such as Amazon but are far more reaching. The new rule is likely to affect any supplier based outside of Quebec and selling goods or rendering services to individuals resident of Québec. Wealth managers and other investment advisors based outside of Québec are likely to be affected. Canadian-based wealth managers may be required to register to the new QST registration system and to determine whether their clients are specified Quebec consumers as early as September 1st, 2019. Determining whether a client is a specified Quebec consumer will be important; the QST charged under the new specified registration system will not be recoverable by the client by way of input tax refund. To avoid having to make this determination, wealth managers may opt for the regular QST registration, which entails other consequences.

The new specified QST registration system will likely affect several industries in Canada. Please contact a member of Crowe BGK’s indirect tax team should you need assistance to confirm how this measure will impact your situation.

About the Author :

Eric Svoboda, B.C.L., LL.B., Attorney, is an Indirect Tax Specialist at Crowe BGK.

Connect with him: [email protected]