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APPLICATION OF AMENDED QST ON JANUARY 1, 2013

News

Published: 7 Dec 2012

As announced by the Federal and Quebec governments in March 2012, Quebec will be moving to a harmonized sales tax system as of January 1, 2013.  

The following changes will be made to the QST system pursuant to the undertakings to harmonize it with the GST/HST system applicable in 2013. 

  • The GST will be removed from the QST base as of January 1, 2013.  To ensure this removal has no impact on provincial finances, the current 9.5% rate of QST will be increased to 9.975%, which is the current effective rate of the QST.
  • This change will be applied to taxable supplies for which tax will become payable on or after January 1, 2013
  • Financial Services that are currently zero-rated will become exempt as under the GST/HST system as of January 1, 2013.

Measure taking effect on April 1, 2013

Effective April 1, 2013 the Federal government and its affiliations currently exempt from payment of the QST as well as the Quebec government and its affiliates currently exempt from payment of the GST/HST and the QST will have to pay these taxes on their acquisitions of taxable goods and services.

As such, as of April 1, 2013, McGill will be required to charge QST and GST/HST to all federal and provincial departments and its affiliates on acquisitions of taxable goods and services

FOR ISSUING TAXABLE INVOICES TO EXERNAL CUSTOMERS:

If you issue an invoice dated January 1, 2013 and thereafter, GST & QST must still be reported separately, but QST will be billed at 9.975% only on the purchase price.  If your invoice is dated prior to January 1st, 2013, QST is to be billed at 9.5% charged on the purchase price plus GST.  
Note that your invoice should always show the rate of GST and QST that is being charged, the respective amounts and our GST (119128981) and QST (1006385920) registration numbers.

Example of an invoice:

A purchase of $100 with an invoice dated BEFORE January 1, 2013 would be taxed as follows:

Purchase price                                                                                      $100.00
GST                                                                                                            $5.00
Subtotal                                                                                                 $105.00
QST @ 9.5% of $105                                                                             $9.98
Grand total                                                                                           $114.98

A purchase of $100 with an invoice dated AFTER January 1, 2013 would be taxed as follows, resulting in no change in either the amount of taxes charged or the total invoice amount:

Purchase price                                                                                      $100.00
GST                                                                                                            $5.00
QST @ 9.975% of $100                                                                         $9.98
Grand total                                                                                           $114.98

For construction contracts, the following rates apply:

Entered into

Rate to be applied

Prior to January 1, 2011

7.5% applied on purchase price plus GST

During 2011

8.5% applied on purchase price plus GST

During 2012

9.5% applied on purchase price plus GST

After January 1, 2013

9.975% applied on purchase price only

Banner will be updated to reflect the updated QST rate for the billings processed by Central Accounts Receivable.  In addition, the direct cash receipt form FGADCSR will be updated prior to January 1st to accommodate these changes.  A separate communication will be issued once the changes to FGADCSR have been completed.

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.

NOTE TO ALL STORES AND CONFERENCE ORGANIZERS

It is your responsibility to ensure that your cash registers are updated to charge the new QST rate of 9.975% as of January 1st, 2013, calculated on the purchase price only.  For conference organizers, as the change results in the same amount of taxes being charged, you need not notify your participants of the change but must ensure that you charge the QST properly as of January 1, 2013. Lastly, for those of you with online stores or conference registration websites, please coordinate with your supplier or with ISR to ensure that the QST rate will appear and be calculated properly as of January 1st, 2013.  If ISR is supporting your online stores or conference registration sites, please contact Daniel Letendre, IT Portfolio Manager for ISR, at 514-398-5023, ext. 00672 for support.

The following table outlines the calculation of the GST and QST included in an expense and to be billed on a sale effective January 1, 2013:

After Dec. 31, 2012

On a $100 expense, which includes 5% GST and 9.975% QST:

GST :  $100 x 0.04349 =  $4.35

QST:   $100 x 0.08676 =  $8.67

Expenses excluding taxes = $86.98

Total paid = $100

 

On a $100 sale billed at 5% GST and 9.975% QST:

GST :  $100 x 0.05000 =  $5.00

QST:   $100 x 0.09975 =  $9.98

Price of items sold = $100

Total billed = $114.98

REBATES

There is no change in the effective tax rate, net of rebates paid by the University, for funds that have no commercial activity will be 1.65% for GST and 5.287% for QST for total taxes of 6.937%.  The following chart shows 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 QST at the nominal rate of 9.975%,  The rebates are 67% and 47% for GST and QST respectively.

The following chart that shows the GST / QST calculation when the purchase price includes both taxes:

Thus for every vendor invoice which includes both GST & QST, effective January 1, 2013 the fund will be charged 93.02% of the total amount invoiced.  There is no change to this effective rate. 

Please note that if your fund has taxable external sales the above rates would not apply since the rebate rates would be greater than the 67% and 47% in the example above. 

Feel free to contact one of the following individuals in the Controller’s office if you have any questions or issues with these new rates.

Michael Lifshitz,  CA, MBA                                                              Peter Kurhajec, MBA
Financial Officer                                                                                  Financial Officer
Phone:  (514) 398-5999                                                                     Phone: (514) 398-3879
E-mail:  michael [dot] lifshitz [at] mcgill [dot] ca                                 E-mail: peter [dot] kurhajec [at] mcgill [dot] ca

 

Reference Materials

http://www.revenuquebec.ca/en/entreprise/taxes/tvq_tps/modifications-regime-tvq.aspx

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