Quebec has issued Information Bulletin 2013-12 to outline the impact on municipalities of the reintroduction of a QST rebate on purchases made by these organizations. Effective January 1, 2014, Quebec municipalities will be entitled to claim a partial rebate of 62.8% of QST paid on property and services purchased to make exempt supplies. This partial rebate will be available for QST that is paid or becomes payable on or after January 1, 2014.
Eligible entities must meet the definition of a “municipality” under an Act respecting the Québec sales tax (AQST) in order to claim this rebate. As a simplifying measure, organizations granted municipal status for GST purposes, as of December 31, 2013, will be deemed to have the identical status for QST purposes. After December 31, 2013, however, organizations wishing to be granted municipal status for QST purposes will be required to file an application with Revenue Quebec to request this designation.
In keeping with the further harmonization of the QST with the GST/HST, the following supplies by municipalities will be taxable for QST purposes:
- sales of movable property, regardless of whether or not the property was consumed, used or acquired for use in the commercial activities of the municipality ;
- sales of property or services by a charity or public institution (currently exempt under section 138.1 or section 141 of the AQST);
- sales of corporeal movable property or services by a charity or public institution, where the amount charged does not exceed the direct cost of the supply (currently exempt under section 138.6 or section 148 of the AQST); and
- most supplies of immovable property (currently exempt under section 168 of the AQST).
In sync with the GST/HST system, Quebec will make amendments to ensure that unregistered small suppliers will be required to charge and remit tax on the sale of capital movable property on which consideration is due or paid after December 31, 2013.
Currently, qualifying non-profit organizations (NPOs) in Quebec are not entitled to claim the 50% QST rebate on the purchase of property and services relating to their activities of a municipal nature. However, as of January 1, 2014, these entities may claim a rebate of 50% on the QST paid or payable on the acquisition of such property and services. It should also be noted that special anti-avoidance rules have been put in place to protect the integrity of the QST system.
For more information please see Information Bulletin 2013-12.