Selling into Quebec? New QST rules may apply to you.
Are you a non-resident of Quebec who sells to individual consumers in “la belle province”? If so, new Quebec Sales Tax (QST) registration rules may apply to you.
The 2018 Quebec Budget included the announcement of a new QST registration system designed to address online transactions between Quebec residents and out-of-province businesses. If taxable supplies to specified Quebec consumers exceed $30,000 within a designated trailing 12-month period, certain previously exempt suppliers are now required to register for QST.
Who is affected?
The new rules apply to companies without a significant physical presence in Quebec that are not already registered for the QST. These companies include foreign suppliers of services and intangible personal property (IPP) and out-of-province Canadian suppliers of services, IPP, and tangible personal property (TPP). Operators of “specified digital platforms”—generally, digital platforms through which third parties can sell incorporeal moveable property or services directly to consumers—are also subject to the new QST registration rules.
Foreign suppliers and “specified digital platforms” were required to register under the new QST system by January 1, 2019 if their Quebec taxable supplies of IPP and services for the 12 months prior to January 1, 2019 exceeded $30,000. Suppliers who did not exceed the specified threshold by that date are required to recalculate their 12-month sales on the first of every month thereafter to determine if registration is subsequently required.
Canadian suppliers outside of Quebec were required to register under the new QST system by September 1, 2019 if their Quebec taxable supplies of IPP, TPP and services for the 12 months prior to September 1, 2019 exceeded $30,000. Again, suppliers who did not exceed the specified threshold by that date are required to recalculate their 12-month sales on the first of every month thereafter to determine if registration is subsequently required.
Suppliers registered under the new QST regime will not be able to claim input tax refunds for QST paid in connection with their commercial activities. That said, it may be preferred to register under the general QST system under certain circumstances. If your company is conducting business in Quebec, contact the tax team at S+C partners to determine how best to move forward.