Wondering if you are required to register for QST? And if yes, how to register for QST? This comprehensive guide walks you through the process of registering for Quebec Sales Tax (QST), covering requirements for businesses in Quebec, across Canada, and internationally. Whether you’re a small business owner, an e-commerce entrepreneur, or a large corporation, we’ll help you navigate the QST registration process with ease.
- Introduction to QST
- Who Needs to Register for QST?
- Registration Requirements for Different Business Types
- Product vs. Service Businesses
- E-commerce Businesses
- Marketplace Facilitator Rules
- Cross-Border Digital Products and Services
- Determining if You’re Carrying on Business in Quebec
- Voluntary Registration
- Step-by-Step: How to Register for QST
- Conclusion
Introduction to QST
The Quebec Sales Tax (QST) is a provincial tax applied to most goods and services sold or provided in Quebec. It’s similar to the Goods and Services Tax (GST) at the federal level but is administered separately by Revenu Québec. Understanding when and how to register for QST is essential for businesses operating in or selling to Quebec.
Why Register for QST?
Understanding why you need to register for QST is important for businesses operating in or selling to Quebec. QST registration ensures compliance with provincial tax laws, allows you to collect and remit the required taxes, and enables you to claim input tax credits on business expenses. Proper QST registration also helps you avoid penalties and maintain good standing with Revenu Québec.
Who Needs to Register for QST?
Generally, businesses that meet the following criteria need to register for QST:
- Businesses carrying on commercial activities in Quebec
- Businesses that make taxable supplies of goods or services in Quebec
- Non-resident businesses that meet specific thresholds for selling to Quebec consumers
You may need to register for QST if you:
- Operate a business in Quebec
- Sell goods or services to Quebec consumers
- Exceed the $30,000 threshold in sales to Quebec
- Provide digital products or services to Quebec residents
- Want to claim input tax credits on business expenses
However, the specifics can vary depending on your business type and location. Let’s explore the requirements in more detail.
Registration Requirements for Different Business Types
Businesses Based in Quebec
If your business is based in Quebec, you generally need to register for QST if:
- Your total worldwide taxable supplies exceed $30,000 in a calendar quarter or over four consecutive calendar quarters.
- You provide taxi or limousine services.
- You operate a daycare center.
Small suppliers (those with taxable supplies under $30,000) are generally not required to register but may do so voluntarily.
Businesses Based in Other Canadian Provinces
If your business is located in another Canadian province but you’re making taxable supplies in Quebec, you may need to register for QST if:
- You have a permanent establishment in Quebec.
- You regularly solicit orders for goods to be delivered in Quebec.
- You regularly provide services to be performed in Quebec.
- Your taxable supplies made in Quebec exceed $30,000 in a calendar quarter or over four consecutive calendar quarters.
Non-Resident (Non-Canadian) Businesses
Non-resident businesses face specific rules for QST registration:
- If you’re a non-resident supplier without a permanent establishment in Quebec, you must register for QST if you make taxable supplies to specified Quebec consumers and your worldwide taxable supplies made in Quebec exceed $30,000.
- Digital property and services providers must register under the specified registration system if their taxable supplies to specified Quebec consumers exceed $30,000.
It’s important to note that these thresholds apply to sales made to non-QST registrants (typically individuals or small businesses) in Quebec.
Product vs. Service Businesses
The registration requirements can differ slightly for product-based and service-based businesses:
Product-Based Businesses
- If you’re shipping physical goods into Quebec, you may need to register if you exceed the $30,000 threshold in sales to Quebec consumers.
- For digital products (e.g., software, e-books), the same $30,000 threshold applies, but you would register under the specified registration system.
Service-Based Businesses
- If you’re providing services to Quebec clients, you generally need to register if you’re considered to be carrying on business in Quebec (more on this later).
- For digital services, the $30,000 threshold applies for sales to specified Quebec consumers.
E-commerce Businesses
E-commerce businesses face unique considerations when it comes to QST registration:
Marketplace Sellers (e.g., Amazon)
If you’re selling products through a marketplace like Amazon.ca:
- The marketplace facilitator (e.g., Amazon) is generally responsible for collecting and remitting QST on sales made through their platform.
- However, you may still need to register if you make direct sales to Quebec consumers outside of the marketplace or if you exceed certain thresholds.
Independent Online Stores (e.g., Shopify)
If you operate your own online store:
- You’re responsible for determining if you need to register for QST based on your sales to Quebec consumers.
- If you exceed the $30,000 threshold in sales to Quebec consumers, you must register and collect QST.
Marketplace Facilitator Rules
Quebec has implemented marketplace facilitator rules to simplify tax collection for online marketplaces:
- Marketplace facilitators (e.g., Amazon, eBay) are required to register for QST and collect tax on behalf of their sellers for sales made to Quebec consumers.
- This applies to both Canadian and non-Canadian sellers using the platform.
- However, these rules don’t absolve sellers from all QST obligations. Sellers may still need to register if they make sales outside the marketplace or if they have a physical presence in Quebec.
Example Scenario
Let’s consider an Ontario-based business selling only through Amazon.ca across Canada, including Quebec:
- For sales made through Amazon.ca to Quebec consumers, Amazon (as the marketplace facilitator) would collect and remit the QST.
- The Ontario-based business wouldn’t need to register for QST solely based on these marketplace sales.
- However, if the business also makes direct sales to Quebec consumers outside of Amazon, or if it has a physical presence in Quebec, it may need to register for QST.
Cross-Border Digital Products and Services
The digital economy has brought new challenges to tax systems worldwide, and Quebec has implemented specific rules for cross-border digital products and services. These rules primarily affect non-resident suppliers of digital goods and services to Quebec consumers.
Specified Registration System
Quebec has introduced a specified registration system for non-resident suppliers of digital products and services. This system applies to:
- Non-resident suppliers located outside Canada
- Digital property and services distribution platforms (online platforms through which non-resident suppliers sell digital property or services)
Under this system, these businesses must register for QST if they make taxable supplies of digital property or services to specified Quebec consumers and their worldwide taxable supplies made in Quebec exceed CAD 30,000.
What Qualifies as Digital Property or Services?
Digital property or services include, but are not limited to:
- Software applications and downloads
- Online games and gaming services
- Streaming services for music, movies, and TV shows
- E-books and digital publications
- Online courses and educational materials
- Cloud-based services and storage
- Online advertising services
Registration and Compliance
If you meet the criteria for the specified registration system:
- You must register using the Revenu Québec online registration service for the specified registration system.
- Once registered, you’ll need to collect QST on your taxable supplies of digital property or services to specified Quebec consumers.
- You’ll file QST returns and remit the tax collected to Revenu Québec on a quarterly basis.
Specified Quebec Consumers
A specified Quebec consumer is a person who:
- Is not registered for QST
- Has a usual place of residence in Quebec
It’s important to note that business customers who are QST registrants are responsible for self-assessing and remitting the QST on their purchases of digital property or services from non-resident suppliers.
Determining Customer Location
Non-resident suppliers are required to take reasonable steps to determine whether their customers are specified Quebec consumers. This can be done by collecting and using information such as:
- Customer’s billing address
- Customer’s home or business address
- IP address of the device used to make the purchase
- Payment-related bank information
At least two non-contradictory pieces of information should be used to make this determination.
Impact on Different Business Models
- Direct B2C Sales: If you’re selling digital products or services directly to Quebec consumers through your own platform, you’ll need to register under the specified registration system if you meet the CAD 30,000 threshold.
- Sales Through Digital Platforms: If you’re selling through a digital distribution platform (e.g., app stores), the platform operator may be responsible for registering and collecting QST. However, you should confirm this with the platform and understand your obligations.
- B2B Sales: For business-to-business transactions, your Quebec business customers who are QST registrants will generally be responsible for self-assessing and remitting the QST.
By understanding and complying with these rules for cross-border digital products and services, you can ensure that your business remains compliant with Quebec’s tax regulations while serving customers in the province.
Determining if You’re Carrying on Business in Quebec
Revenu Québec uses several factors to determine if a business is carrying on activities in the province.
Here’s a questionnaire that can help you assess your situation:
- Does your business have agents, employees, or sales representatives in Quebec?
- Does your business deliver products to Quebec?
- Does your business have assets or inventory in Quebec?
- Do employees, agents, or sales representatives come to Quebec to purchase assets?
- Do employees, agents, or sales representatives come to Quebec to solicit clients?
- Does your business have a bank account in Quebec?
- Does your business advertise in Quebec?
- Does your business have a branch or office in Quebec?
- Does your business perform services physically in Quebec?
- Does your business manufacture goods in Quebec?
- Are payments from clients in Quebec processed by a financial institution outside Quebec?
- Where are contracts or agreements considered to be made at law? In Quebec or outside Quebec?
If you answer “No” to most of these questions, especially those related to physical presence and activities in Quebec, you may not be considered to be carrying on business in Quebec. However, you should still consider the $30,000 threshold for sales to Quebec consumers, particularly for digital goods and services.
Voluntary Registration
Even if you’re not required to register for QST, you may choose to do so voluntarily. This can be beneficial if:
- You want to claim input tax refunds on QST paid on business expenses.
- You anticipate growth that will soon require mandatory registration.
- You want to simplify your tax compliance across Canada.
To register voluntarily, you’ll need to complete the appropriate registration form and provide additional documentation.
Step-by-Step: How to Register for QST
If you determine that you need to register for QST, here’s how to proceed:
1. Complete the appropriate registration form:
- For general registration: Form LM-1-V (available on the Revenu Québec website)
- For specified registration: Use the online registration service for the specified registration system on the Revenu Québec website
2. Gather required documents:
- Copy of a document proving the business’s incorporation (for non-Quebec businesses)
- A resolution of the board of directors, articles of incorporation, or by-law proving that the person signing the form is authorized to do so.
3. Submit the form and documents to Revenu Québec:
- For general registration: Submit via mail or in person at a Revenu Québec office
- For specified registration: Submit online through the Canada Revenue Agency portal
Note: The RC577 form is used for GST/HST registration with the Canada Revenue Agency (CRA) and is not part of the QST registration process with Revenu Québec.
Common Questions About Registering for QST
- When should I register for QST? – You should register for QST as soon as you determine that your business meets the registration requirements or when you voluntarily choose to register.
- Can I register for QST online? – Yes, you can register for QST online through Revenu Québec’s website for both general and specified registrations.
- How long does it take to register for QST? – The processing time for QST registration can vary. Online registrations are typically processed faster than mail-in applications. It’s best to allow several weeks for the registration process to be completed.
- Is there a fee to register for QST? – No, there is no fee to register for QST. However, you may incur costs related to preparing and submitting the required documentation.
- Can I register for GST and QST at the same time? – While GST and QST are separate registrations, you can often complete both processes concurrently. GST is handled by the Canada Revenue Agency, while QST is managed by Revenu Québec.
Conclusion
Now that you understand the criteria for QST registration and how to register for QST, you can confidently navigate the registration process and ensure your business complies with Quebec’s tax regulations. Remember, proper QST registration is important for operating legally in Quebec and avoiding potential penalties.
It’s always advisable to consult with a sales tax expert on our team contact Revenu Québec directly (Contact-NR@revenuquebec.ca) for guidance specific to your situation.
Remember, compliance with QST regulations is important for maintaining good standing with tax authorities and avoiding potential penalties. By understanding your obligations and registering when required, you’ll be well-positioned to successfully conduct business in Quebec’s vibrant market.
