notice
New Amended QST Effective January 1st, 2013
The governments of Canada and Québec have entered into an agreement to better harmonize the Québec sales tax (QST) system with the goods and services tax (GST) system.
Effective January 1, 2013, the current QST will become the "Amended QST", to further harmonize certain QST provisions to fall in line with the GST/HST legislation. However, as is implied with the term "Amended", the QST will still be a separate provincial sales tax (PST) administered by Revenu Québec.
The first main change is that the QST rate will no longer be levied on a GST-included amount (9.5% stated rate with an effective rate of 9.975%), but the actual stated rate for the Amended QST will become the current effective rate of 9.975%.
The second and more significant change is that the Amended QST will mirror the GST/HST legislation with respect to the treatment of financial services and financial institutions. This will result in generally treating the supply of financial services as exempt instead of zero-rated. This change will not affect Concordia University activities.
The transitional rules effectively require the amended QST rate to apply to supplies where the consideration is paid or becomes payable on or after January 1, 2013 - generally where the invoice for the supply is dated on or after that date. The QST will then be calculated on the value of the total or partial consideration established excluding the GST.
Measure taking effect on April 1, 2013
Effective April 1, 2013, the federal government and its mandatories currently exempt from payment of the QST as well as the Québec government and its mandatories currently exempt from payment of the GST/HST and the QST will have to pay these taxes on their acquisitions of taxable properties and services.
Accordingly, as of April 1, 2013, Concordia University will be required to charge QST and GST/HST to all federal and provincial departments and its mandatories on acquisitions of taxable properties and services.
This measure will apply to the GST/HST and to the QST that will become payable by a government entity after March 31, 2013.
As of January 1, 2013, please find bellow details on how to apply these new rules:
FOR ISSUING TAXABLE INVOICES TO EXTERNAL CUSTOMERS:
The general rules apply where the University issues an invoice for a supply of taxable goods (i.e., tangible and intangible personal property) or a service and the charge will be subject to the QST rate of 9.975% if all or a portion of its consideration becomes due after December 31, 2012, and it is not paid before January 1, 2013. The QST rate will then be showed on the invoice at 9.975 % and calculated on the value of the total or partial consideration established excluding the GST.
If any portion of the consideration for the goods or services becomes due after December 31, 2012, and is not paid before January 1, 2013, QST at a rate of 9.975% will apply to that portion.
EXAMPLE OF INVOICE
| Invoice dated BEFORE January 1, 2013 | |
|---|---|
| Service XYZ | $100.00 |
| GST 5% | 5.00 |
| QST 9.5% | 9.98 ((100+5) x 9.5%) |
| Total | $114.98 |
| Invoice dated AFTER January 1, 2013 | |
|---|---|
| Service XYZ | $100.00 |
| GST 5% | 5.00 |
| QST 9.975% | 9.98 (100 x 9.975%) |
| Total | $114.98 |
(Please note, the University invoices should always show the rate (and/or amount) of GST & QST that is being charged.)
Units responsible for cash registers, POS systems, e-commerce solutions, and any other transaction feeds must ensure that their billing systems are updated and can support these new rates prior to January 1st, 2013. The QST rate will no longer be levied on a GST-included amount (9.5% stated rate with an effective rate of 9.975%), but the actual stated rate for the Amended QST will become the current effective rate of 9.975%.
| Nominal Rate | Effective Rate | |
|---|---|---|
| Prior to January 1, 2011 | 7.5% | 7.875% |
| Effective January 1, 2011 | 8.5% | 8.925% |
| Effective January 1, 2012 | 9.5% | 9.975% |
| Effective January 1, 2013 | 9.975% | 9.975% |
FOR THE PAYMENT OF INVOICES FROM VENDORS:
The rules outlined above for the QST rate to be charged when the University invoices our external customers also apply when our vendors invoice us. Thus, when receiving an invoice from a supplier, the basic rule is that if the invoice is dated on or after January 1st, 2013, QST should be charged at 9.975%. The QST will then be calculated on the value of the total or partial consideration established excluding the GST. For more detail , see appendix 1.
If the University transaction relates to a deposit, refund, lease arrangement, membership fee, ticket sale, subscription, progress billings, holdback, etc., please see transitional rules on Appendix 1.
The Banner financial system will be updated by financial Services to reflect these new rates.
Below is a table which shows the calculation of the GST and QST on an expense with a cost of $100:
| On a $100 expense or sale billed 5% GST and 9.975% QST: | |
|---|---|
| GST: | $100 x 0.0500 = $ 5.00 |
| QST: | ($100) x 0.09975 = $9.98 |
| Expenses excluding taxes: | $100.00 |
| Total paid: | $114.98 ($100.00 + $5.00 + $9.98) |
REBATES
It is important to note that the QST rebate rates (47%) have not changed. It is only the QST nominal rate that has increased from 9.5% to 9.975% effective January 1, 2013.
Below is a chart showing the calculation of the amount of GST and QST that would be expensed on a $100 purchase after deducting the tax rebates claimed by the University. This example assumes that GST is charged at the rate of 5% and the QST at the nominal rate of 9.975%. The rebates are respectively 67% for GST purposes and 47% for QST purposes.
Thus, the combined tax rate net of rebates paid by the University (for the fund that has no commercial activity) will be 6.94% (GST 1.65% + QST 5.29%).
| Purchase price (1) | Taxes rate (2) | Taxes paid (3) | Rebate rate (4) | Rebates claimed (5) | Net taxes paid [(3)-(5)] (6) | Tax rate net of rebates (7) | |
|---|---|---|---|---|---|---|---|
| GST | $100.00 | x 0.0500 | = $5.00 | x 67% | = $3.35 | $1.65 | 1.65% |
| QST | $100.00 | x 0.09975 | = $9.98 | x 47% | = $4.69 | $5.29 | 5.29% |
| 6.94% | |||||||
Please note that if the University fund has taxable external sales the above rates would not apply since the recovery rates would be greater than the 67% and 47% in the example above as some purchases would be eligible for input tax credits and input tax refunds.
Please contact Geneviève Desrosiers (4720) if you require any help in updating your various systems or for any additional questions.
Reference Materials
- Amended QST- Not true harmonization, Definitive memo (September 2012)
- Revenu Québec web site
- Ministère des finances web site