Sales Tax and Invoicing of External Parties Process

Sales Tax

The University supplies many goods and services to third parties for which invoices are issued. In general, invoices for goods and services that are subject to taxes must be issued by Financial Services.

Document requirements for invoices and receipts (issued when relating to "sales") are more stringent due to the complication of sales taxes. The following identifies the information required on all invoices and receipts of sale:

  • Vendors' name
  • Date of Invoice / Receipt of goods or services rendered
  • Total Consideration (amount charged)
  • GST and QST charged or stated to be included, where applicable
  • Vendor's Tax Registration Numbers
  • McGill's GST registration number is R119128981 RT0001 (also used for HST)
  • McGill's QST registration number is 1006385920
  • Purchaser's Name
  • Terms of Sale
  • Description of Good or Service

Records must be adequate to determine the amount of liability under the tax legislation, or the amount of any refund or rebate payable. Given the University's decentralized nature in terms of sales transactions, the responsibility of maintaining adequate records is placed on departments engaging in the activity of selling and collecting. Records must be kept of all sales to satisfy the requirement of the tax authorities. Typical examples of documents that support sales include contracts, order forms, and delivery vouchers. They can also be cash register tapes, and copies of receipts. Documents supporting a sale must be retained for a period of seven (7) years.

Definition Courses vs. Seminars and Workshops

Sales Tax Assessments on Domestic Conventions

Sales Examples by General Rule

General Rule Taxes Applicable Tax Code Exception
Sales to Indigenous GST & QST MCTT Tax exempt if services provided or delivered to a reserve.
Sales to diplomats GST & QST MCTT Zero-rated or example supplies as defined by law.
Service provided to a non-resident individual during his/her stay in Canada GST & QST MCTT  

Sales consumed in:

Ontario

Nova Scotia

NB

Newfoundland/ Labrador

PEI

HST

 

MCH1

MCH3

MCH4

MCH5

MCH6

 
Property or services exported No Taxes MCZZ Sent outside Quebec but still in Canada – charge GST (or HST for participating provinces)
Farm livestock (supply of livestock ordinarily raised to produce food for human consumption) No Taxes MCZZ Supply of chickens for pet shop
Deposits to assets/liabilities No Taxes NT  
Deposits to “7” accounts (reimburse expenses paid on dept. FOAPAL) Taxes dependent on if G/QST paid on original purchase

MCGQ, MCGX, MCXQ

If no taxes paid on original purchase based on Banner invoice, then use MCXX

 

Sales Examples by Sales Type

Sales Type Taxes Applicable Tax Code Exception
Domestic seminars, conferences, conventions

GST & QST

MCTT

Activity is for credit leading to a degree or diploma; pre-requisite for a particular course.

Participants are not residents of Quebec (MCTE)

Participants are not residents of Canada (MCTE) but the GST applies only on 50% of the food & beverage cost.

Conference/Seminar/Convention hosted by McGill, outside of Quebec, in a non HST participating province (registration MCTE for residents of Canada). For participants who are not residents of Canada (MCTE), but the GST applies only on 50% of the food & beverage cost.

Conference/Seminar/Convention hosted by McGill, outside of Quebec, in an HST participating province (registration MCH for all residents of Canada). For participants who are not residents of Canada (MCH), but the HST applies only on 50% of the food & beverage cost.

Conference/Seminar/Convention hosted by McGill in a different country (registration MCEE for all participants)

Workshops GST & QST MCTT Activity is for credit leading to a degree or diploma; pre-requisite for a particular course.
Short-term rentals, e.g. chapel for weddings GST & QST MCTT  
Short-term rentals, e.g. tourist in residence GST & QST MCTT Addition of a Lodging Tax of 3.5%, calculated on the total cost of the accommodations before GST and QST.
Sale/rental of used goods, where the goods were primarily used in commercial activity GST & QST MCTT Selling to departments within McGill
Vending machine sales GST & QST MCTT  
Personal care products, e.g. soap, toothpaste, bleach, antiseptics GST & QST MCTT  
Repairs of medical devices GST & QST MCTT  
Sales of gas (carbon dioxide, helium, nitrogen) GST & QST MCTT Sale of medical oxygen is zero-rated (MCZZ)
Course materials including course packs To be determined case by case TBD  
Copyright fees included on fee statements GST & QST MCTT  
Drugs labeled or supplied solely for agricultural purposes or use in veterinary medicine GST & QST MCTT  
“Printed” Books* GST only MCTZ

* “Printed” Books are defined as having an ISBN and audio recording of books

If books do not fit the above definition QST applies (MCTT)
Basic groceries (unflavored dairy products, meat, fish, eggs, vegetables, fruit, bread) No taxes MCZZ Soft drinks, candy, potato chips as well a food & beverages served at receptions or other special events are taxable (MCTT)
Medical/Assistive devices (e.g. artificial limbs, speaking/hearing devices, lancets, insulin syringes) No taxes MCZZ  
Medical devices on prescription, e.g. heart monitors, extremity pumps, orthopedic footwear, catheters No taxes MCZZ Taxable if sold to health-care institutions (hospitals, clinics) and health-care professionals (physicians, pharmacists, dentists) (MCTT)
Parts, accessories or attachments designed for zero-rated assistive devices No taxes MCZZ  
Repairs of zero-rated medical devices No taxes MCZZ  
Foreign research contracts No taxes MCZZ  
Grant revenue (MEES or governmental/private granting agencies) No taxes MCEE  
Tuition, transcript and applications fees charged to students No taxes MCEE  
Late payment charges, e.g. library, ICC fines No taxes MCEE  
Advertising services No taxes MCEE  
Gift certificates No taxes MCEE  
Salaries, wages, tips No taxes MCEE  
Donations, corporate sponsorships No taxes MCEE  

 

Exempted Supplies

The following activities are EXEMPTED from sales tax (exempted supplies):

  • Some Financial Services for GST/HST purposes;
  • Intellectual property (e.g. licenses on patents), unless the supply of intellectual property is supplied to a non-resident of Canada (Québec). In that case, the supply would be zero-rated for GST/HST and QST purposes.

Zero-Rated Supplies

NO TAX is charged on zero-rated supplies, examples of which are following:

  • Exported Goods and Services;
  • Basic Groceries;
  • Most Medical Devices;
  • Most Agricultural and Fishing Products;
  • Farm Livestock Transportation where origin/destination is outside Canada
  • Some Financial Services for QST purposes.

Public Service Bodies

McGill University, as a registered charity and educational institution, is considered a public service body and therefore most goods and services provided by the University are tax exempt. If a supply is exempted under the rules for public service bodies, tax cannot be charged, unless a particular provision makes it taxable.

The following supplies of goods and services are not exempt and are therefore TAXABLE:

  • New Goods and Related Services (example: item manufactured by McGill from raw materials purchased);
  • Goods purchased for resale (example: computers sold by McGill Computer Store (MCS) to students/staff for personal use);
  • Capital Property used primarily (50%) in a Commercial Activity (example: sales of computers or cash registers previously used by McGill Bookstore);
  • Rentals of Real Property for less than 30 days;
  • Rentals of Real Property, where the election of section 211 of the ETA is made;
  • Seminars, Conferences, Workshops by a University;
  • Admissions to a Place of Amusement (films, musical performances...);
  • Memberships that supply taxable goods and services.
  • Non-credit courses primarily for recreation.

Educational Services Rules

Educational (and related) services are taxable , UNLESS they appear in the list below:

  • "Credit" courses offered by the University;
  • Courses that form a part of a program of two or more courses that are approved by a Committee (must be less than 50% recreational);
  • Courses that lead to, upgrade or maintain a professional designation (recognized by a Provincial Regulatory Body);
  • Music Courses;
  • Tutoring services for exempt courses;
  • Official Second Language (English or French) Instruction;
  • Tuition;
  • Compulsory Student Fees (e.g. registration, athletics, transcript);
  • Incidental fees where the nominal consideration rule applies;
  • Residence Rooms;
  • Meal plans (where the amount for the plan is sufficient to provide a student with at least 10 meals per week for the period of the plan, which must be at least one month).

Nominal Consideration Rule

As stated above, the sale of new goods is a taxable supply, however if the selling price is for nominal consideration, it is EXEMPT. Nominal consideration is defined as providing a good or service at or below its direct cost (i.e. doesn't include University labour costs, overhead or capital costs).

Nil Consideration Rule

If all or substantially all (over 90%) of the supplies of property or service are normally provided for no consideration (i.e. free), then all the supplies are EXEMPTED.

Amateur Performance & Events Exemption

If 90% or more of the performers, athletes, competitors participate in a performance/event for no consideration (free, i.e. no monetary reward or direct compensation/remuneration) AND the event has not been represented or advertised as one featuring paid professionals, admission/ticket sales are EXEMPT.

Recreational Program Exemption

Where an otherwise taxable recreational program is primarily intended for children 14 years of age or under, under privileged, or the physically/mentally disabled, it is EXEMPT. This exemption is only maintained if there is no overnight supervision involved for a substantial portion of the program.

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