The Strauss Blog

Does Your Association Need to Register to Collect Québec Sales Tax in 2019?

Next year, associations who have members living in Québec may have to register with Revenu Québec and begin collecting 9.975% Québec Sales Tax (QST), even if they have no physical presence in the province.

The purpose of this article is to summarize the new QST rules and to review the existing ones.

New QST Rules

Beginning on September 1, 2019, Canadian associations and other “Canadian suppliers with no physical or significant presence in Québec [will have] to register with Revenu Québec…for the purpose of collecting and remitting the QST,” if the value of its goods and services sold to its Québec members is greater than $30,000. The rule changes take effect for non-Canadian suppliers on January 1, 2019.

Further, should your association make any purchases in Québec, the amount of QST paid cannot be applied as an Input Tax Refund (ITR) to offset/reduce the QST collected. This is not a typo: as your organization does not have a physical presence in Québec, then you are “assumed” by the legislation to not have a reason to be eligible to benefit from ITRs (ITRs are Revenu Québec’s version of an Input Tax Credit (ITC)).

If your association will have to start collecting QST next year, then you may need to consider the impact of an almost 10% increase in membership fees—an increase for which there is no added value to your members—on your Québec members.

Existing Rules

Currently, an association located outside of Québec and/or does not have a physical presence in Québec does not have to charge its members QST on membership fees, or on any other goods or services(except for an event)that it provides to its members, unless it is registered with Revenu Québec to collect QST.

The only exception is on registration fees for events held within the Province of Québec.

If your organization charges GST/HST on registration fees for events such as conferences and professional development workshops, and you are going to be holding an event in Québec, then you must register with Revenu Québec, and charge 14.975% QST—even if your association does not carry on any other business activities in Québec.

Registering to collect QST because your association is holding an event in Québec means that you must also collect QST on membership fees. If membership invoices are sent while your association is registered to collect QST, then you will have to invoice your members who are living in Québec for QST. You can cancel your QST registration once your event is completed and all of the bills have been paid.

A more detailed overview of this requirement is in in my article GST/HST and QST – Do You Know What to do for Québec Events and Members? You can find the exact wording of the requirement in Section 410 of the Act Respecting the Québec Sales Tax.

QST is Not a Harmonized Sales Tax

In  New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, provincial sales taxes have been harmonized with the Government of Canada’s 5% GST.

The QST is not harmonized with the Government of Canada’s 5% GST. This means that:

  • The invoice must include both of your association’s GST/HST and QST numbers;
  • The amount of GST and QST must be shown separately; and
  • The amount of GST and QST must appear on the invoice.

Registering to Collect QST

On their website, Revenu Québec states, “You must apply for registration under the QST system before you make your first taxable sale in Québec… You must collect the QST as of the date you register (or are required to be registered).”[1]

You can register online to collect QST. Allow up to two months for the application to be approved.

FYI: The registration process requires that you provide personal information about each director, including his/her Social Insurance Number (SIN). Should a board member question the need for the his/her SIN, you can respond by saying that according to the federal Privacy Commissioner’s office, a federal or provincial government agency can request this confidential information if the request is required by legislation.

“’Tis impossible to be sure of anything but Death and Taxes”

Québec’s new government, might make changes to the introduction of the 2019 QST rules. However, it might be wise for your association to plan ahead to register for QST if your Québec-based revenue is greater than $30,000, or if it will be holding an event in la belle province.

 

The article is provided for informational purposes only. It constitutes general information related to QST. It does not constitute legal, tax, accounting, or other professional advice and you may not rely on it as such.

[1] revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/registering-for-the-gst-and-qst/(retrieved September 24, 2018).