On March 10, 2020, Minister of Finance, Eric Girard tabled the Québec budget for 2020-2021. This year’s announcement delivers a balanced provincial budget for the next five years, predicting a $1.9 billion surplus for 2019-2020. Spending in the budget focuses on the following priorities: cultivating Québec’s economic advancement; success for students; improving the wealth of Québecers; better access to health care; strong action to support environmentally responsible transportation; and supporting the province’s culture. The province also reaffirmed its commitment to reducing tax evasion and implementing a strong action plan for a green economy.
From a commodity tax perspective, this year’s budget includes a few interesting announcements, as summarized below.
QST Specified Registration System
During 2019, Québec required certain non-resident suppliers of intangible personal property, services, or goods provided to specified consumers in Québec to be registered under a new QST specified registration system. For the 2019-2020 fiscal year, the revenues generated from non-resident suppliers under this system are expected to be nearly $120 million.
However, the Canada Border Services Agency, Revenu Québec, and Canada Post Corporation conducted a pilot project regarding the collection of QST on packages delivered to Québec from outside Canada, which resulted in unexpectedly low revenues. As a result, in 2021, the Québec and federal governments will join forces, using a harmonized approach to improve the collection of QST and GST/HST on the supply of goods to Québec consumers by non-resident suppliers. Further details on this collaboration will be released in the future.
Additional information on the QST specified registration system may be found in our Ryan Tax Development: “2019 New Year’s Day Changes from Revenu Québec.”
Measures to Fight Tax Evasion and Tax Avoidance
As part of the government’s strategy to ensure the integrity of its tax system, additional measures were introduced under the Tax Fairness Action Plan to combat tax evasion and avoidance.
Key actions targeting specific sectors perceived to have higher prospects for tax evasion and avoidance were announced in the 2020 budget, including:
- introducing innovative technological solutions to simplify tax compliance in the residential renovation sector;
- increasing criminal history checks on the guarantors, directors and shareholders of construction companies;
- strengthening police intervention and surveillance of tobacco smuggling networks and supply channels;
- new initiatives to prevent the trade of illicit cannabis;
- adapting inspection and investigation strategies to prevent a resurgence of alcohol smuggling and ensure public health and safety;
- tightening regulations in the personnel placement agency sector by introducing the requirement for licenced agencies to hold a valid attestation continuously and requiring agencies to be tax compliant to receive or hold attestation; and
- granting more powers to Revenu Québec inspectors to review sales in the remunerated passenger transportation sector (i.e., taxis and digital ride-sharing platforms), in conjunction with the roll-out of new sales recording systems for this sector in the summer of 2020.
Legislative amendments to the Tobacco Tax Act, the Tax Administration Act, the Taxation Act, the Act respecting the Québec sales tax, and the Regulation respecting personnel placement agencies and recruitment agencies for temporary foreign workers will be required to effect the initiatives outlined above and will be introduced as needed.
Further information on Québec’s 2020 budget can be found on the province’s website at: Québec Budget 2020
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.