Another QST Rate Increase to Take Effect January 1, 2012
In the Budget Speech of March 30, 2010, the Minister of Finance of Québec announced another Québec sales tax (QST) rate increase, in addition to the increase to take effect January 1, 2011, which was announced in the Budget Speech of March 19, 2009.
Application of the latest QST rate increase
The increase in the QST rate to 9.5% applies to taxable supplies in respect of which QST becomes payable on or after January 1, 2012.
Taxable supplies of movable property or services are subject to QST at the rate of 9.5% where all the consideration for the supply becomes due after December 31, 2011, and is not paid before January 1, 2012. The QST rate of 9.5% also applies to any portion of the consideration for such a supply that becomes due after December 31, 2011, and is not paid before January 1, 2012.
Taxable supplies of an immovable by way of sale are subject to QST at the rate of 9.5% where the supply is made under an agreement in writing entered into after December 31, 2011, and the agreement provides for the transfer of ownership and possession of the immovable to the recipient after that date.
Taxable supplies in respect of the construction, renovation, alteration or repair of an immovable or a ship or other marine vessel are subject to QST at the rate of 9.5% where the supply is made under an agreement in writing entered into after December 31, 2011.
The aforementioned rules regarding taxable supplies of movable property or services also apply to taxable supplies of an immovable that are made other than by way of sale.
There are special rules regarding continuous supplies, budget plan arrangements with reconciliation, exchanges of movable property and primacy rules.
For further information, see page A.107 in Additional Information on the Budgetary Measures, published by the Ministère des Finances.
Consequential amendments and changes
Rounded-off mathematical factors
QST is calculated on the consideration, which includes goods and services tax (GST) at the rate of 5%. The effective QST rate is currently 7.875% (8.925% beginning in 2011) and the effective combined GST-QST rate is currently 12.875% (13.925% beginning in 2011). The rounded-off mathematical factors are 7.87% and 12.87%, respectively (8.92% and 13.92%, respectively, beginning in 2011).
A registrant can use the rounded-off mathematical factors if the cash register ordinarily used by the registrant is not sophisticated enough to calculate QST using the actual rate of 7.5% (8.5% beginning in 2011) or the three-decimal mathematical factors – 7.875% and 12.875% (8.925% and 13.925% beginning in 2011).
Once the increase in the QST rate to 9.5% takes effect on January 1, 2012, the three-decimal mathematical factors will be 9.975% and 14.975%, and the rounded-off mathematical factors that can be used will be 9.97% and 14.97%.
Taxable benefit related to automobile operating costs
For the 2011 taxation year, in the case of a benefit related to automobile operating costs, the amount of tax to be included in the calculation of the registrant's net tax is equal to 5.4% of the value of the benefit. Beginning with the 2012 taxation year, the rate will be increased to 6%.
Quick methods of accounting
Small businesses whose revenues from taxable supplies do not exceed $215,000 ($217,000 beginning in 2011) can multiply their total revenues from taxable supplies, including GST and QST, by the prescribed rate, which for vendors of corporeal movable property is currently set at 2.7% (3% beginning in 2011) and for other businesses is currently set at 5.3% (6% beginning in 2011). Once the increase in the QST rate to 9.5% takes effect in 2012, the limit on revenues from taxable supplies will be increased to $219,000, and the prescribed rate will be increased to 3.4% for vendors of corporeal movable property and 6.6% for other businesses.
As for certain public service bodies, the prescribed rate for municipalities is currently 4.6% (5.2% beginning in 2011) and the prescribed rate for other bodies is currently 5.9% (6.6% beginning in 2011). Once the increase in the QST rate to 9.5% takes effect in 2012, the prescribed rate will be increased to 5.7% for municipalities and 7.3% for other bodies.
The newest prescribed rates for quick methods of accounting and the new limit of $219,000 on the revenues that a small business can have from taxable supplies apply to all reporting periods that begin after December 31, 2011.
Simplified method for calculating rebates and input tax refunds related to expense accounts
The mathematical factors will be specified by Revenu Québec at a later date.