Application of the GST and QST – Dealers and Purchasers of Road Vehicles
As a rule, the GST and the QST apply to the taxable sale, lease and repair of road vehicles.
Calculation of the GST
The GST applies at the rate of 5% to sales of new or used road vehicles made by dealers registered for the GST and is generally calculated on the agreed sale price. The GST does not apply to sales of used vehicles between individuals.
Calculation of the QST
In the case of a used road vehicle registered under the Highway Safety Code, 9.5% QST is calculated on the higher of the following amounts: the agreed sale price or the estimated value of the vehicle (to which the GST has been added, where applicable). In the case of a new road vehicle, the QST is calculated on the agreed sale price (to which the GST has been added, where applicable).
However, the sale of a motor vehicle to a person who acquires it solely for resale, or for lease for a period of at least one year, is considered to be a zero-rated supply. The same is true of a vehicle acquired by a recycler for purposes such as the resale of automotive parts. Note that such sales are zero-rated only if the purchaser is a QST registrant.
The QST on motor vehicles is generally collected by the Société de l'assurance automobile du Québec (SAAQ) at the time of registration. Vendors that sell a motor vehicle at retail are not authorized to collect the QST. However, vendors must collect the QST when selling other road vehicles.
If you are a vendor, please note that, even though you are not required to collect the QST on the retail sale of a motor vehicle, you must calculate the QST payable by the purchaser and furnish a document (sales contract or other document) clearly indicating the amount of QST payable to the SAAQ, as well as other required information, such as:
- the sale price
- the amount used to calculate the QST (based on the estimated value, if applicable)
- the amount of GST collected
- the amount allowed on any trade-in
- the delivery date
If you hold a vehicle dealer's or recycler's permit issued under the Consumer Protection Act, you must complete section C on the Attestation de transaction avec un commerçant (ATAC) form.
If you fail to correctly indicate the QST payable by the purchaser, you will be liable for any QST amount that the purchaser owes but that is not collected by the SAAQ, in addition to a penalty corresponding to 15% of the amount in question. Moreover, if you collect the QST by mistake, you must refund the amount to the purchaser.
Property and services
In some cases, certain property or services may be sold along with a motor vehicle, but with the price being indicated separately on the sales contract. The vendor must collect the QST on sales of such property and services, but the amount so collected is not to be entered on the Attestation de transaction avec un commerçant (ATAC) form.
Examples of such property and services include:
- extended warranty or coverage
- paint sealer
- rust-proofing treatment
- anti-theft marking
- upholstery protection
- remote starter
- electronic starter lock
- anti-theft system
Note that premiums paid on an automobile replacement insurance policy are not subject to the GST or the QST, but are subject to the 9% tax on insurance premiums.
You are required to pay the QST to the SAAQ when you register a motor vehicle that you have purchased at retail. This is the case even if you have already paid a sum that was improperly or erroneously charged to you by the vendor as an amount of QST. In such a situation, no refund can be granted to the purchaser by the SAAQ or Revenu Québec. You will have to contact the vendor directly to obtain a refund.
Some dealers offer to act as the purchaser's agent for the purposes of vehicle registration. Under this type of arrangement, the purchaser remits the QST and the registration fees to the dealer, who is then responsible for remitting them to the SAAQ and completing the registration process. However, if the dealer fails to do so, the purchaser is nevertheless liable for payment of QST and registration fees and must remit them directly to the SAAQ.