On June 12, 2018, Quebec Bill 150 received Royal Assent. The Bill includes changes relating to the application of the Quebec Sales Tax (QST) to supplies made by suppliers with no significant presence in Quebec through the implementation of a new “specified registration system.”
What does this mean exactly?
As the existing legislation is written, non-residents of Quebec only have a requirement to register for the QST if they have a permanent establishment or are considered to be “carrying on business” in Quebec.
Currently the burden of reporting and remitting QST is often passed along from the non-resident vendor to the resident consumer, which creates two problems:
- There are significant tax revenue losses due to low rates of compliance by consumers who are required to self-assess QST. The Minister estimates that $270 million of QST was unreported in 2017 due to low rates of compliance by consumers in respect of online transactions with non-resident suppliers.
- Suppliers outside Quebec are receiving a competitive advantage against Quebec businesses, as Quebec businesses are required to collect and remit QST on their supplies in Quebec.
Registration and Collection Requirement
This change includes the introduction of an entirely new QST registration system. Non-resident suppliers whose aggregate consideration received in respect of taxable supplies made to persons who are specified Quebec consumers is at least $30,000, over the last 12-month period. They will be required to register under a new specified registration system.
A specified Quebec consumer will be a person not registered for QST whose usual place of residence is in Quebec.
Although a non-resident of Quebec may become registered under this new specified registration system, it will not be considered a registrant for other purposes within the QST system. They will also not be able to claim input tax refunds in respect of QST paid on property and services acquired in the course of their commercial activities. A non-resident required to register under the specified registration system that meets the existing requirements for optional registration under the general registration system may elect to register under the general registration system instead of the specified registration system.
When does this become effective?
These measures will come into effect as of January 1, 2019 in respect of non-residents outside Canada, and as of September 1, 2019 in respect of non-residents located in Canada outside Quebec.
We know how hard it is to keep up with the constant tax changes. If you need any assistance, please reach out to myself at blake.deluca@rlb.ca or call 519-822-9933 and a member of our team would be happy to help!
