QST, GST/HST, Fuel Tax and Freight Carriers

About this content

This content is a simplified rewording of the official Revenu Quebec publication: IN-218(2024-10).pdf, produced to help citizens and business owners better understand their tax obligations. It does not constitute legal or tax advice. Refer to the official document for any decision.

Who this document is for

This document is mainly intended for freight carriers and sub-carriers of freight. It is more specifically concerned with businesses or individuals carrying on transportation activities that may be affected by:

• the Goods and Services Tax (GST);
• the Harmonized Sales Tax (HST);
• the Quebec Sales Tax (QST);
• the fuel tax;
• the rules related to interprovincial or international road transportation;
• the rules of the International Fuel Tax Agreement (IFTA);
• certain zero-rated sales granted in the transportation sector;
• the special obligations of bulk fuel carriers;
• the special obligations of tobacco carriers;
• the rules applicable to sub-carriers working with interprovincial carriers. The document also applies to Quebec businesses registered for GST/HST and QST that provide freight transportation services, as well as to unregistered carriers in certain specific cases.

Context and objective

This publication explains how to apply the tax rules relating to GST/HST, QST and fuel tax in the freight transportation sector. Its purpose is to help carriers and sub-carriers understand:

• when they must charge GST, HST or QST;
• when a service or sale may be zero-rated;
• when a service is considered to be performed in Quebec, in Canada, outside Quebec or outside Canada;
• which obligations apply to carriers operating in several provinces, territories or states;
• which steps are required for certain permits;
• how to handle certain reimbursements between carriers and sub-carriers;
• how to claim the tax credits or refunds to which a registrant may be entitled. The document also states that the information provided is for information purposes only. It does not constitute a legal interpretation of the Excise Tax Act, the Act respecting the Quebec sales tax, or any other law. Quebec participates in the International Fuel Tax Agreement, which changes the way certain interprovincial or international carriers must manage fuel tax and, in some cases, certain QST obligations. The publication was prepared in collaboration with the Canada Revenue Agency.

Bibliographic information and general notes

The document indicates the following:

• print version ISBN: 978-2-555-00044-5;
• PDF version ISBN: 978-2-555-00045-2;
• legal deposit: Bibliotheque et Archives nationales du Quebec, 2024;
• document version: IN-218 (2024-10);
• an English version exists under the title QST, GST/HST and Fuel Tax: How They Apply to Freight Carriers (IN-218-V);
• the English mention appearing in the document also indicates 2023-10. The document states that the masculine gender is used to make reading easier, even though inclusive writing is usually preferred.

Pages or sections not available in the provided text

The transmitted content contains pages 1, 3 to 20 and 24. Pages 2, 21, 22 and 23 are not present in the provided text. Therefore, no readable information from those pages can be reworded here.

Complete and detailed information

Abbreviations used in the document

Abbreviation	Meaning
ITC	Input tax credit
IFTA	International Fuel Tax Agreement
ITR	Input tax refund
GST	Goods and Services Tax
HST	Harmonized Sales Tax
QST	Quebec Sales Tax

General rules relating to GST/HST and QST

General application of GST and QST

GST and QST apply to most goods and services supplied. GST generally applies to transactions carried out in Canada. Its rate is 5 % of the sale price. When the transaction is carried out in Quebec, QST may also apply. Its rate is 9.975 % of the sale price. In the first two paragraphs of the original section on general rules, the abbreviation GST refers only to GST, not to GST/HST. The document generally uses the word sale rather than the technical term supply, since sales represent the most common type of supply.

Zero-rated goods and services

Certain goods and services are taxable at the rate of 0 %. They are therefore said to be zero-rated. The document gives the following examples:

• basic food products;
• prescription drugs. Even though the rate is 0 %, these goods and services remain taxable sales for certain purposes, including determining whether a person is carrying on commercial activities.

Exempt goods and services

Certain goods and services are not subject to GST or QST because they are exempt. The document mentions in particular:

• certain health services;
• long-term residential rents.

HST in participating provinces

HST applies in the following participating provinces:

• Prince Edward Island;
• New Brunswick;
• Nova Scotia;
• Ontario;
• Newfoundland and Labrador. As a general rule, the GST rules also apply to HST. Businesses must charge and remit HST on taxable sales they make in participating provinces, except when the sales are zero-rated. Quebec businesses registered for GST/HST must charge HST when they make sales in a participating province. In the publication, the abbreviation HST is not always repeated. Unless otherwise indicated, the abbreviation GST is used as a shorthand to mean GST/HST.

Registration for GST and QST files

Persons who carry on commercial activities must generally register for GST and QST. A commercial activity includes, in particular, operating a business whose sales are taxable, including zero-rated sales.

When a person is registered, they must charge GST and QST on their taxable sales, except on zero-rated sales. The document states that the term registrant means a person:

• who is registered for GST and QST;
• or who should be registered even if they are not yet.

Small supplier

A person may choose not to register if they are considered a small supplier. Generally, a person is a small supplier when the total of their taxable sales does not exceed $30,000:

• during a given calendar quarter;
• or for all of the four preceding calendar quarters. The calculation takes into account taxable sales made worldwide by:
• the person themselves;
• their partners. Capital property sales are not included in this total. The document gives the following examples of capital property:
• a building;
• an automobile. Even when a person is not required to register because they are a small supplier, they may choose to do so if they meet the applicable conditions.

Exception for small suppliers

A person who carries on commercial activities and who has chosen not to register because they are a small supplier generally does not have to charge GST or QST. However, this rule does not apply to certain taxable sales of real property. In this type of situation, GST or QST may have to be charged even if the person is not registered.

ITCs and ITRs

A registrant may recover, under certain conditions, the taxes they paid or that became payable on goods and services acquired in the course of their commercial activities. These mechanisms are called:

• ITC under the GST system;
• ITR under the QST system. Most registrants claim their ITCs and ITRs when they file their returns for the period in which the purchases were made. In general, the deadline for claiming eligible ITCs or ITRs is four years.

Simplified method for calculating ITCs and ITRs

A simplified method for calculating ITCs and ITRs is provided for small businesses. This method offers another way to calculate the tax credits or refunds to which the business is entitled. It does not change:

• the way GST or QST is invoiced;
• the way GST or QST is charged;
• the way collected taxes are reported. Its main advantage is that the business does not have to calculate the exact tax amount separately for each invoice or supporting document. The document states that the simplified method for calculating ITCs and ITRs and the quick method of accounting are two different methods provided for by law.

GST and QST returns

A registrant must file a GST return and a QST return to report:

• taxes collected;
• taxes that should have been collected;
• taxes paid or payable for which they are claiming ITCs or ITRs. When filing returns:
• ITCs are deducted from GST collected or to be collected;
• ITRs are deducted from QST collected or to be collected. If the taxes collected or to be collected are greater than the ITCs and ITRs, the registrant must remit the difference. If the taxes collected or to be collected are less than the ITCs and ITRs, the registrant may claim a refund. Small businesses may use the quick method of accounting to determine the amount of GST and QST to remit, if they are eligible.

Filing frequency

When registering for the tax files, it is sometimes possible to choose the filing frequency for GST and QST returns. If no choice is made, a filing frequency is assigned.

Obligation to file returns

A registrant must file a GST or QST return for each reporting period, even if they have:

• no amount to pay;

• no refund to claim. Since January 1, 2024, returns must be filed electronically. This electronic filing may be done:

• through online services;

• through a return filing service offered by most financial institutions. Carriers that are not registered may, in certain situations, have to use the following forms: | Form | Name | |---|---| | FP-505 | Special Returns | | FP-505.D.D | QST Return for Property Brought into Quebec by a Person Not Registered for the QST File | The obligation to file a return electronically does not apply:

• to charities;

• to specified selected financial institutions.

Registration, permits and tax-related forms

Registration for GST and QST files

When a person must register for the GST and QST files, or when they choose to do so voluntarily, they may register:

• through online services;
• by completing the form Application for Registration (LM-1).

Bulk fuel transportation

A person who transports bulk fuel must also complete the form:

Form	Name
CA-27.1	Application for Permit - Fuel Tax Act
This requirement is in addition to, where applicable, the rules on registration for the tax files.

Tobacco transportation

A person who transports:

• unidentified tobacco intended for sale;
• or raw tobacco; must complete the form: | Form | Name | |---|---| | TA-6.1 | Application for Permit - Tobacco Tax Act | The document defines raw tobacco as:
• tobacco leaves;
• broken parts of tobacco leaves;
• when processing has not gone beyond the drying stage;
• as well as tobacco intended to become a component of tobacco sold.

General rules relating to fuel tax

International Fuel Tax Agreement

Quebec participates in the International Fuel Tax Agreement, known in English as the International Fuel Tax Agreement or IFTA. This agreement aims to reduce administrative formalities for carriers that carry on interprovincial or international transportation of goods or persons. Thanks to the Agreement, a covered carrier does not have to file a separate fuel tax return in each province or state that is a member of the Agreement in which it operates.

IFTA permits and decals

A carrier covered by the Agreement terms must apply for:

• a permit;
• decals. The form to use is: | Form | Name | |---|---| | CA-500 | Application for a Permit and Decals (IFTA) |

Quarterly fuel tax return

The carrier must file one return each quarter with its base jurisdiction. This return must be accompanied, as applicable:

• by payment of the balance owing;
• or by a refund claim. The base jurisdiction then takes responsibility for communicating with the provinces or states concerned, in particular to allocate the fuel tax. The form to use is: | Form | Name | |---|---| | CAZ-510 | Quarterly Fuel Tax Return |

Non-member territories and states

A carrier must verify the requirements applicable in the territories and states where it operates when they do not participate in IFTA. These requirements must be obtained from the organizations responsible for those territories or states.

Carrier established in a non-member territory or state

A carrier established in a Canadian territory or in a state that has not joined IFTA must obtain a temporary trip permit to operate in Quebec with a vehicle covered by the Agreement.

Bulk fuel carrier

A bulk fuel carrier must hold a bulk fuel carrier permit issued under the Fuel Tax Act. The required form is:

Form	Name
CA-27.1	Application for Permit - Fuel Tax Act

Tobacco carrier

A carrier of unidentified tobacco intended for sale must hold a permit under the Tobacco Tax Act. The same requirement applies to a carrier of raw tobacco. Raw tobacco includes:

• tobacco leaves;
• broken parts of tobacco leaves;
• when processing has not gone beyond the drying stage;
• tobacco to be used as a component of tobacco intended for sale. The required form is: | Form | Name | |---|---| | TA-6.1 | Application for Permit - Tobacco Tax Act |

Zero-rated sales made to carriers

Certain sales made to carriers are zero-rated, both under the GST system and under the QST system.

Sale of a good or service to an unregistered foreign carrier

A non-resident person may, in certain cases, purchase movable property or zero-rated services in Canada or Quebec. Under GST, the person must not reside in Canada. Under QST, they must not reside in Quebec. In both cases, they must not be registered. Zero-rating may apply when the goods or services are acquired for consumption, use or supply in one of the following contexts.

Passenger or goods transportation by ship, aircraft or rail

Zero-rating may apply if the person carries on a passenger or goods transportation business:

• from Canada or to Canada, under GST;
• from Quebec or to Quebec, under QST; and the transportation is carried out by:
• ship;
• aircraft;
• rail. The rule also applies when the transportation is:
• between two points abroad, passing through Canada, under GST;
• between two points outside Quebec, passing through Quebec, under QST.

Operation of a ship or aircraft by a government

Under GST, zero-rating may apply to goods or services used for the operation of a ship or aircraft by, or on behalf of, the government of a foreign country. Under QST, the rule applies to the operation of a ship or aircraft by or on behalf of:

• a province other than Quebec;
• the Northwest Territories;
• the Yukon Territory;
• Nunavut;
• a country other than Canada.

Ship used for scientific purposes or for undersea cables

Zero-rating may also apply to goods or services related to the operation of a ship:

• to collect scientific data abroad, under GST;
• to collect scientific data outside Quebec, under QST;
• to lay submarine telegraph cables;
• to repair submarine telegraph cables.

Examples of zero-rated goods and services

The zero-rated goods and services in these contexts may include in particular:

• fuel;
• goods used for the operation of a ship;
• goods used for the operation of an aircraft;
• goods used for the operation of a railway;
• repair services;
• maintenance services;
• rail connection charges;
• rail switching charges;
• pilotage services;
• certain rights related to real property for which a fee is charged. The document gives the following examples of rights related to real property:
• aircraft landing fees;
• railway usage rights;
• storage fees.

Sale of fuel to registered international carriers

The sale of fuel to a carrier is zero-rated if all of the following conditions are met:

• the purchaser is registered at the time of the sale;
• the purchaser carries on a passenger or goods transportation business by ship, aircraft or rail;
• the transportation is to or from Canada, under GST;
• the transportation is to or from Quebec, under QST;
• the rule also applies to transportation between two points abroad that passes through Canada, under GST;
• the rule also applies to transportation between two points outside Quebec that passes through Quebec, under QST;
• the fuel is acquired to be used in that passenger or goods transportation business.

Emergency repair services rendered to a non-resident

Emergency repair services are zero-rated when they are sold to a person who does not reside:

• in Canada, under GST;
• in Quebec, under QST. Replacement parts sold with those services are also included in the zero-rating. The rule applies when the services relate to:
• containers;
• means of transport; that the person transports or uses in a passenger or goods transportation business.

Freight transportation services

General rule for GST

GST applies to freight transportation services carried out in Canada. A freight transportation service is considered to be supplied in Canada if:

• it is partly performed abroad;
• but its point of origin and destination are in Canada. In this case, it is subject:
• to GST at the rate of 5 % when the destination is in Quebec or in a non-participating province;
• to HST when the destination is in a participating province. In this section, when the document refers to GST at the rate of 5 %, it specifies that the abbreviation GST refers only to GST, and not to GST/HST.

General rule for QST

QST applies to freight transportation services performed in Quebec, except when they are zero-rated. A freight transportation service partly rendered outside Quebec is considered to be rendered in Quebec when:

• the point of origin is in Quebec;
• the destination is in Quebec. In this case, it is subject to QST at the rate of 9.975 %, unless it is part of:
• a continuous freight transportation service to outside Quebec;
• or a continuous freight transportation service originating outside Canada.

Transportation service from the rest of Canada to Quebec

Under the QST system, the transportation service of tangible movable property from a place located in Canada but outside Quebec to a place located in Quebec is considered to be performed outside Quebec. It is therefore not directly subject to QST by the supplier. However, a Quebec resident who acquires such a service must self-assess, that is, remit the QST themselves, if the service is not acquired exclusively in the course of their commercial activities.

International freight transportation

International freight transportation services are zero-rated under both the GST and QST systems.

Definitions applicable to freight transportation services

Destination

In the context of a continuous freight transportation service, the destination is the place indicated by the shipper where possession of the property is transferred:

• to the consignee;
• or to the consignee designated by the shipper.

Shipper

The shipper is the person who gives the carrier possession of tangible movable property at the point of origin:

• of a continuous freight transportation service;
• or of a continuous freight transportation service to abroad. A carrier of the property covered by the service is not considered the shipper for the purposes of this definition.

Point abroad

Under GST, a point abroad is:

• a place located outside Canada;
• or a place located in Canada when goods have been imported without having been cleared, if their transportation complies with the rules of the Customs Act or another federal Act that prohibits, controls or regulates the importation of goods. Under QST, the same idea applies, but the expression used is point outside Canada rather than point abroad.

Point of origin

In the context of a continuous freight transportation service, the point of origin is the place where the first carrier takes possession of the goods to be transported.

Continuous freight transportation service

A continuous freight transportation service is the transportation of tangible movable property by one or more carriers to a destination specified by the shipper. For this definition to apply, all transportation services sold by the carrier or carriers must be provided according to the shipper's instructions.

Continuous freight transportation service to abroad

Under GST, this refers to the transportation of tangible movable property by one or more carriers:

• from a place in Canada to a point abroad;
• or from a place in Canada to another place in Canada from which the goods are to be exported. For the service to qualify as a continuous service to abroad, the goods must not be further processed, transformed or altered in Canada after the shipper gives them to the carrier and before export. There is an exception when the processing, transformation or alteration is necessary for transportation. The document gives the following examples of alterations necessary for transportation:
• freezing goods so that they arrive at their destination in good condition;
• disassembling goods at the port to prevent them from being damaged during transport;
• packaging goods at the port to protect them during transport. In these situations, the alterations do not prevent the transportation service performed in Canada from being part of a continuous freight transportation service to abroad. Conversely, the document gives the example of transporting iron ore in Canada for a steel manufacturer that later exports the steel produced from that ore. The transformation of the iron ore into steel is not necessary for transporting the ore. The transportation service is therefore taxable and does not form part of a continuous freight transportation service to abroad. Under QST, the definition applies in an equivalent manner, but the terms are adapted:
• Canada is replaced by Quebec;
• abroad is replaced by outside Quebec;
• exported is replaced by taken outside Quebec.

Freight transportation service

A freight transportation service includes:

• transportation of tangible movable property;
• mail delivery;
• driving a motor vehicle used for delivery;
• any other good sold or service rendered to the recipient by the person providing the transportation service, when that good or service is part of the transportation service or incidental to it.

This rule applies even when separate fees are charged for the incidental good or service. However, this definition excludes the service provided by a passenger transportation supplier when that service consists of transporting an individual's baggage.

Services incidental to transportation

When a carrier sells services such as:

• storage;
• packaging;
• loading; in the context of a freight transportation service, these incidental services receive the same tax treatment as the main transportation service. Thus, they are:
• taxable if the main transportation service is taxable;
• zero-rated if the main transportation service is zero-rated.

Transportation services: detailed rules by origin and destination

Transportation of goods to abroad

Under GST, a freight transportation service from a place in Canada to a destination located abroad is zero-rated if the value of the service is $5 or more. Under QST, a freight transportation service from a place in Quebec to a place outside Quebec is considered to be performed outside Quebec. It is therefore not subject to QST.

Domestic transportation forming part of a continuous service to abroad - GST

Under GST, a freight transportation service from one place in Canada to another place in Canada is zero-rated if all of the following conditions are met:

• the goods are exported;
• the service forms part of a continuous freight transportation service to abroad;
• the value of the transportation service is $5 or more;
• the shipper provides the carrier with a written statement indicating that the goods are intended for export and that the service provided by the carrier forms part of the continuous transportation of the goods to abroad.

This statement may:

• be written on the bill of lading given to the first carrier;
• or be provided in a separate document given to the carrier. The statement must indicate, in substance, that the goods are being shipped for export and that the service provided by the carrier forms part of a continuous freight transportation service to abroad, within the meaning of subsection 1(1) of Part VII of Schedule VI to the Excise Tax Act. It must also contain:
• the name of the shipper or their authorized representative;
• the signature of the shipper or their authorized representative. If this statement is not provided, the carrier must charge GST on any part of the freight transportation service performed in Canada.

Domestic transportation forming part of a continuous service to outside Quebec - QST

Under QST, the transportation of goods between two places in Quebec is zero-rated if all of the following conditions are met:

• the goods are taken outside Quebec;
• the service forms part of a continuous freight transportation service to outside Quebec;
• the value of the transportation service is $5 or more;
• if the goods are intended to be shipped outside Canada, the shipper confirms to the carrier that the goods are intended to be taken outside Quebec and that the service to be provided forms part of a continuous freight transportation service to outside Canada. For this confirmation, the shipper must complete the form: | Form | Name | |---|---| | VD-197 | Statement Relating to the Transportation of Tangible Movable Property | The statement used under GST may also be used under QST. The transportation of goods between two places in Quebec is also zero-rated when:
• the goods are intended to be taken outside Quebec but remain in Canada;
• and the service forms part of a continuous freight transportation service to outside Quebec.

Transportation of goods from abroad - GST

Under GST, the following are zero-rated:

• a freight transportation service from a point abroad to a place in Canada;
• a freight transportation service from a point abroad to another point abroad. This zero-rating includes:
• the transportation of bonded goods that have not been cleared;
• the transportation of goods that pass through Canada between two points located abroad.

Transportation of goods from outside Quebec - QST

Under QST, a sale of a freight transportation service is generally considered to be made in Quebec when the destination of the service is in Quebec. However:

• a freight transportation service from a point outside Quebec to another point outside Quebec is not subject to QST;
• for example, transportation from a point abroad to a place in Canada but outside Quebec is not subject to QST;
• a freight transportation service from a point located in Canada but outside Quebec to a place in Quebec is considered to be performed outside Quebec and is therefore not subject to QST;
• a freight transportation service from a point abroad to a place in Quebec is zero-rated.

Domestic transportation forming part of a continuous service from a point abroad - GST

Under GST, transportation of goods between two points in Canada is zero-rated when:

• it forms part of a continuous freight transportation service;
• the point of origin is abroad;
• the destination is in Canada;
• the terms of the transportation are specified by the shipper. The carrier performing the transportation in Canada can zero-rate its service if it has written evidence showing that the transportation forms part of a continuous service from a point abroad to a destination in Canada.

Example provided in the document

Goods arrive in Montreal from London, England. They are covered by a bill of lading. On the original bill of lading, the shipper indicated that the final destination is Toronto. A separate carrier is then engaged to deliver the goods to the consignee in Toronto. That carrier may zero-rate the transportation service performed in Canada if it keeps a copy of the original bill of lading or other documentary evidence considered satisfactory, showing that the transportation forms part of a continuous service from a point abroad to a destination in Canada.

Domestic transportation forming part of a continuous service from outside Canada - QST

Under QST, the transportation of goods from a place in Canada to a place in Quebec is zero-rated when:

• it forms part of a continuous freight transportation service;
• the point of origin is outside Canada;
• the destination is in Quebec;
• the terms of the service are specified by the shipper. Documentary evidence is required. In addition, a freight transportation service between two places located in Quebec is considered to be performed outside Quebec if:
• it forms part of a continuous freight transportation service;
• the point of origin is in Canada but outside Quebec;
• the destination is in Quebec. In this case, a Quebec resident who acquires the service must self-assess the QST if the service is not acquired exclusively in the course of their commercial activities.

Summary table: application of GST/HST and QST according to origin and destination

The table below summarizes the rules indicated in the document. It specifies that transportation of goods from one place in Canada to another place in Canada, or from one place in Quebec to another place in Quebec under QST, may be zero-rated if it forms part of a continuous freight transportation service. In this table, the abbreviation GST refers only to GST, not to GST/HST.

Origin	Destination	GST or HST	QST
Quebec	Quebec	Taxable for GST	Taxable
Canada, outside Quebec	Quebec	Taxable for GST	Not subject
Outside Canada	Quebec	Zero-rated	Zero-rated
Quebec	Canada outside Quebec, in a participating province	Taxable for HST	Not subject
Quebec	Canada outside Quebec, in a non-participating province	Taxable for GST	Not subject
Canada outside Quebec	Canada outside Quebec, in a participating province	Taxable for HST	Not subject
Canada outside Quebec	Canada outside Quebec, in a non-participating province	Taxable for GST	Not subject
Outside Canada	Canada outside Quebec	Zero-rated	Not subject
Quebec	Outside Canada	Zero-rated if the value is $5 or more	Not subject
Canada outside Quebec	Outside Canada	Zero-rated if the value is $5 or more	Not subject
Outside Canada	Outside Canada	Zero-rated	Not subject
For situations where QST is indicated as not subject because the service is considered to be performed outside Quebec, the purchaser must self-assess the tax if they reside in Quebec and if the service is not acquired for exclusive consumption, use or sale in the course of their commercial activities.

Carrier sharing arrangements

Several carriers may participate in providing a continuous freight transportation service between the shipper's premises and the consignee's premises. This situation constitutes a sharing arrangement. Carrier agreements may take various forms. For example:

• an intermediary carrier may act as a subcontractor to another carrier;
• or intermediary carriers may have an implied agreement with the shipper or the consignee. Carrier sharing arrangements, whether they concern domestic or international transportation, are treated as payments for transportation services provided between carriers. These sales of transportation services between carriers are zero-rated. Only the carrier who invoices the freight transportation service to the shipper or consignee must charge and collect GST and QST, when those taxes apply.

International freight forwarders

The sale of a service consisting of acting as an agent for a person may be zero-rated if the following conditions are met:

• the person does not reside in Canada, under GST;
• the person does not reside in Quebec, under QST;
• the person is not registered at the time of the sale;
• the service is related to the sale to that person of a zero-rated freight transportation service described in the preceding rules;
• the service is not provided as part of a carrier sharing arrangement.

Specific rules relating to QST

Acquisition of a road vehicle

Persons carrying on interprovincial or international transportation of goods must pay QST when they acquire a road vehicle in Quebec. If these persons are registered, they are generally entitled to an ITR. This rule applies:

• to all interprovincial carriers, regardless of the number of vehicles used for road transportation;
• to sub-carriers engaged by an interprovincial road carrier, regardless of the carrier's tax status;
• to vehicles leased for a period of more than 30 days by an interprovincial carrier. A tax calculated on the basis of the mileage driven by a carrier in another province may be payable by that other province. In that case, the carrier must remit that tax directly to the province concerned. A person who acquired a vehicle in a province other than Quebec does not have to pay QST based on the mileage driven in Quebec.

Specific rules for sub-carriers linked to an interprovincial carrier

Definition of sub-carrier

A sub-carrier is a person who agrees in writing with a carrier to provide:

• a vehicle;
• a driver's services; and that driver is placed under the carrier's immediate control.

Tax treatment of expense reimbursements

When an interprovincial or international carrier enters into an agreement with a sub-carrier to obtain transportation services, the sub-carrier may reimburse the carrier for certain expenses paid by the latter. The document addresses in particular:

• fuel costs;
• insurance costs;
• administration costs.

Fuel costs

The carrier must charge GST and QST on the amount reimbursed by the sub-carrier for fuel. This obligation does not apply if the fuel was purchased:

• from retailers located outside Canada, under GST;
• from retailers located outside Quebec, under QST.

Insurance costs

Generally, the sub-carrier agrees to be covered under the carrier's insurance policy and reimburses the carrier for the portion of the premium that concerns them. The carrier must charge GST and QST on the amount billed to the sub-carrier for these insurance costs.

Administration costs

The carrier must charge GST and QST on administration costs billed to the sub-carrier.

Special cases and exceptions

Small suppliers

A person whose worldwide taxable sales, including those of their partners, do not exceed $30,000 during a given calendar quarter or during the four preceding calendar quarters is generally a small supplier. They may not be required to register for the GST and QST files. However:

• they may choose to register voluntarily if they meet the conditions;
• they generally do not have to charge GST or QST if they are not registered;
• there is an exception for certain taxable real property sales.

Zero-rating at the rate of 0 %

Certain goods or services are taxable at the rate of 0 %. They therefore do not generate tax to be collected, but remain taxable sales for certain purposes. The document mentions in particular:

• basic food products;
• prescription drugs.

Exemption

Certain goods and services are exempt, which means GST and QST do not apply. Examples mentioned:

• health services;
• long-term residential rents.

Non-resident and unregistered international carriers

A non-resident and unregistered carrier may, in certain specific situations, acquire zero-rated movable property or services when they are used in international transportation by ship, aircraft or rail, or in certain government, scientific or undersea cable-related uses.

Fuel sold to registered international carriers

The sale of fuel to a carrier may be zero-rated only if the purchaser is registered at the time of the sale and if the fuel is used in an eligible international passenger or goods transportation business by ship, aircraft or rail.

Emergency repair services

Emergency repairs and parts sold with those repairs may be zero-rated if they are sold to a non-resident and relate to containers or means of transport used in a passenger or goods transportation business.

Transportation to abroad or outside Quebec

A freight transportation service to abroad may be zero-rated under GST if its value is at least $5. Under QST, transportation from Quebec to outside Quebec is considered to be performed outside Quebec and is not subject to QST.

Domestic transportation in a continuous service to abroad

Domestic transportation may be zero-rated if it forms part of a continuous service to abroad or to outside Quebec. The conditions include in particular:

• a service value of $5 or more;
• proof that the goods are intended to be exported or taken outside Quebec;
• a written statement or appropriate form;
• the absence of processing not necessary for transportation before export or departure from Quebec.

Processing necessary or unnecessary for transportation

An alteration necessary for transportation, such as freezing, disassembling or packaging goods to protect them, does not cause the continuous service to abroad to lose its status. A commercial processing operation that is not necessary for transportation, such as turning iron ore into steel before the steel is exported, prevents the original transportation service from being considered part of a continuous service to abroad.

Transportation from abroad

Transportation of goods from a foreign point to Canada, or between two foreign points, is zero-rated under the GST system. Under the QST system:

• transportation from a point abroad to Quebec is zero-rated;
• transportation from a point outside Quebec to another point outside Quebec is not subject to QST;
• transportation from a point in Canada outside Quebec to Quebec is considered to be performed outside Quebec.

QST self-assessment

A Quebec resident may have to self-assess and remit QST when they acquire a service considered to be performed outside Quebec, including a transportation service from a point in Canada outside Quebec to Quebec, if that service is not acquired exclusively in the course of their commercial activities.

Carrier sharing arrangements

Payments between carriers in a sharing arrangement are zero-rated. However, the carrier who invoices the shipper or consignee must charge the applicable taxes on the service invoiced to that customer.

Vehicle acquired in Quebec

An interprovincial or international carrier must pay QST when it acquires a road vehicle in Quebec. If it is registered, it is generally entitled to an ITR. This rule also applies to sub-carriers engaged by an interprovincial road carrier and to vehicle rentals of more than 30 days.

Vehicle acquired outside Quebec

A person who acquires a vehicle in another province does not have to pay QST based on the mileage driven in Quebec.

Mileage taxes in other provinces

Another province may impose a tax proportionate to the mileage driven in its territory. The carrier must then remit it directly to that province.

Reimbursements between carriers and sub-carriers

Reimbursements of fuel, insurance and administration expenses made by a sub-carrier to a carrier may be taxable. Exception mentioned: fuel expenses do not give rise to GST or QST being charged by the carrier if the fuel was purchased from retailers located outside Canada, or outside Quebec for QST.

Steps and procedures

Register for the GST and QST files

A person required to register or who chooses to do so must proceed:

1. either through online services;
2. or by completing the form Application for Registration (LM-1).

Apply for a permit for bulk fuel transportation

A bulk fuel carrier must:

1. complete the form CA-27.1;
2. obtain a permit under the Fuel Tax Act.

Apply for a tobacco transportation permit

A carrier of unidentified tobacco intended for sale or raw tobacco must:

1. complete the form TA-6.1;
2. obtain a permit under the Tobacco Tax Act.

Apply for an IFTA permit and decals

A carrier covered by the International Fuel Tax Agreement must:

1. complete the form CA-500;
2. apply for an IFTA permit;
3. apply for the required decals.

File a quarterly fuel tax return

The covered carrier must:

1. file one return each quarter with its base jurisdiction;
2. use the form CAZ-510;
3. attach payment of the balance owing, if any;
4. or attach a refund claim, if any.

Obtain a temporary trip permit

A carrier established in a Canadian territory or a state that has not joined IFTA must obtain a temporary trip permit to operate in Quebec with a vehicle covered by the Agreement.

File GST and QST returns

A registrant must:

1. file a return for each reporting period;
2. do so even if no balance is payable and even if no refund is claimed;
3. report taxes collected or that should have been collected;
4. report taxes paid for which ITCs or ITRs are claimed;
5. deduct ITCs from GST and ITRs from QST;
6. pay the difference if the taxes collected or to be collected exceed the ITCs or ITRs;
7. claim a refund if the ITCs or ITRs exceed the taxes collected or to be collected. Since January 1, 2024, the return must be filed electronically, except for:

• charities;
• specified selected financial institutions.

Special returns for unregistered carriers

Unregistered carriers may have to use:

Form	Name
FP-505	Special Returns
FP-505.D.D	QST Return for Property Brought into Quebec by a Person Not Registered for the QST File

Obtain zero-rating for domestic transportation to abroad - GST

For a domestic Canadian transportation service that forms part of a continuous transportation service to abroad to be zero-rated, the shipper must provide the carrier with a written statement.

This statement must:

1. confirm that the goods are intended for export;
2. confirm that the service provided by the carrier forms part of a continuous transportation service of the goods to abroad;
3. indicate the name of the shipper or the shipper's authorized representative;
4. be signed by the shipper or the shipper's authorized representative;
5. be included on the bill of lading or given in a separate document. Without this statement, the carrier must charge GST on the portion of the service performed in Canada.

Obtain zero-rating for domestic transportation to outside Quebec - QST

For transportation between two places in Quebec to be zero-rated when it forms part of a continuous transportation to outside Quebec:

1. the goods must be taken outside Quebec;
2. the value of the service must be $5 or more;
3. the service must form part of a continuous transportation service to outside Quebec;
4. if the goods are to be shipped outside Canada, the shipper must complete form VD-197 or use the equivalent GST statement.

Keep documentary evidence for transportation from abroad

When a domestic transportation service forms part of a continuous service from a point abroad or outside Canada, the carrier must keep documentary evidence. This evidence may include:

• a copy of the original bill of lading;
• or any other satisfactory document showing that the domestic transportation forms part of a continuous service.

Important warnings

The publication is provided for information purposes only. It does not constitute a legal interpretation of the Excise Tax Act, the Act respecting the Quebec sales tax or any other law. A registrant must file a GST or QST return for each reporting period, even if no amount is payable and even if no refund is claimed. Since January 1, 2024, returns must be filed electronically, except for charities and specified selected financial institutions. A carrier that does not have the required written statement from the shipper for a domestic transportation service forming part of a continuous service to abroad must charge GST on any part of the service performed in Canada. A Quebec resident may have to self-assess and remit QST themselves when they acquire a transportation service considered to be performed outside Quebec, if the service is not acquired exclusively in the course of their commercial activities. A carrier must verify the requirements of the territories or states where it operates when they do not participate in IFTA. A bulk fuel carrier must hold the required permit under the Fuel Tax Act. A carrier of unidentified tobacco intended for sale or raw tobacco must hold the required permit under the Tobacco Tax Act. Interprovincial or international carriers that acquire a road vehicle in Quebec must pay QST, even though they can generally claim an ITR when they are registered. A tax calculated according to mileage driven in another province may be payable directly to that other province. Reimbursements of expenses between a carrier and a sub-carrier may create an obligation to charge GST and QST, particularly for fuel, insurance and administration costs, subject to the exception for fuel purchased outside Canada or outside Quebec. Pages 2, 21, 22 and 23 are not present in the provided text. Their content therefore cannot be verified or reworded.

Summary

This document explains how freight carriers and sub-carriers must apply GST/HST, QST and fuel tax, particularly when they carry on interprovincial or international transportation. GST is generally 5 %, QST 9.975 %, and several transportation services may be zero-rated depending on origin, destination, minimum value of $5, and the existence of a continuous transportation service. Registered carriers must file returns for each period, claim their ITCs and ITRs within the applicable deadlines, and since January 1, 2024, file their returns electronically except where exceptions apply. Carriers covered by IFTA must obtain a permit and decals using form CA-500 and file a quarterly return using form CAZ-510. Bulk fuel carriers must obtain the permit requested using form CA-27.1, while carriers of unidentified tobacco intended for sale or raw tobacco must use form TA-6.1. The zero-rating rules for transportation services depend heavily on destination, point of origin, the presence of written documents and the purchaser's status. Sub-carriers linked to an interprovincial carrier must pay close attention to the tax treatment of fuel, insurance and administration reimbursements. Interprovincial or international carriers that acquire a road vehicle in Quebec must pay QST, but they can generally claim an ITR if they are registered.