Exports of Property
As a rule, tangible personal property is zero-rated for GST purposes if it is exported from Canada by the purchaser. Similarly, corporeal movable property is zero-rated for QST purposes if it is shipped outside Québec by the purchaser. You are therefore not required to collect the taxes on such property supplied to a person that intends to export it from Canada (or ship it outside Québec).
You may nonetheless claim input tax credits (ITCs) and input tax refunds (ITRs) to recover the taxes you paid on the goods and services acquired to make or supply such property.
To qualify as zero-rated, such property must meet all the following conditions:
- The property must not be a product subject to excise tax (such as alcoholic beverages, tobacco products and cannabis products).
- The purchaser must not be a consumer.
- Once the property has been delivered to the purchaser in Québec or elsewhere in Canada, it must be taken outside Québec or Canada within a reasonable length of time.
- The property must not have been acquired for consumption, use or supply in Québec or Canada before being exported.
- The property must not be processed, transformed or altered in Québec or Canada after the supply and before being exported by the purchaser, except to the extent required for its transport.
- The supplier must provide proof that the purchaser exported the property from Canada (or shipped it outside Québec) since we may require this proof for audit purposes.
- If a person exports property that is electricity, crude oil or natural gas, or any other property transported by means of a wire, pipeline, or other conduit, the person must not be registrant.
A supply of property is also zero-rated under the following circumstances:
- The property is shipped internationally or outside Québec (for QST purposes) to a destination specified in the contract for carriage of the property.
- Possession of the property is transferred to a common carrier or a consignee retained to ship the property internationally or outside Québec (for QST purposes).
- The property is mailed or sent by courier to a foreign address or to an address outside Québec (for QST purposes).
Property and services under warranty supplied in Québec or elsewhere in Canada to a non-resident that is not a registrant are generally zero-rated.
Supplies of intangible personal property (incorporeal immovable property) to non-residents who are not registrants are generally zero-rated. The exceptions are:
- a supply of such property to an individual who is in Canada or Québec when the supply is made;
- a supply of such property that relates to real property in Canada (or movable property in Québec) or to tangible personal property that is ordinarily situated in Canada (or corporeal movable property that is ordinarily situated in Québec);
- a supply of such property that relates to a supply of a service that is made in Canada or Québec, unless the service is zero-rated;
- a supply of such property that can only be used in Canada or Québec;
- a supply of making a telecommunications facility that is such property available for use in providing a telecommunication service.
An export trading house is a person at least 90% of whose commercial activities consist in exporting property outside Canada (under the GST system) or buying property in Québec for resale outside Québec (under the QST system). Such a person can request our authorization to use export certificates (shipping certificates) in order to purchase property without paying the taxes. These certificates serve as proof that the property is to be exported from Canada (or shipped outside Québec).
Eligible non-manufacturing businesses whose activities consist in exporting property from Canada (or shipping property outside Québec), and that add limited value through their processing or distribution activities, may use an export (or shipping) distribution centre certificate. This certificate allows the businesses to acquire the following property without paying the taxes:
- property added to other property during processing;
- customers' property that undergoes processing services.
For more information about such certificates, contact us.
Property purchased by a non-resident that is not a consumer
Under both the GST and QST systems, if a person (other than a consumer) that is not resident in Canada or Québec purchases tangible personal property (corporeal personal property) for export but does not meet the criteria for zero-rating mentioned above, the person must pay the taxes. However, such a person may be entitled to a refund of the taxes paid, provided the person:
- exports the property from Canada (or ships it outside Québec) within 60 days after delivery;
- uses the property primarily (more than 50%) outside Canada (or outside Québec).
To claim a GST rebate, federal form GST189, General Application for Rebate of GST/HST, must be filed with the Canada Revenue Agency. The form is available at canada.ca/taxes. To claim a QST rebate, form VD-403-V, General Application for a Québec Sales Tax (QST) Rebate, must be filed.
Property and services purchased by a non-resident consumer
In general, you must collect GST and QST on property purchased by non-resident consumers. A GST and QST rebate may be granted for tax paid on certain goods and services related to and supplied in connection with a foreign convention. As a supplier of such goods and services, you may pay or credit the rebate to your clients.
You must report the amounts paid or credited using form FP-106-V, Information Return: Rebates Paid or Credited for Foreign Conventions and Tour Packages. For more information, refer to document RC4036, GST/HST Information for the Travel and Convention Industry.
Persons resident in Canada, outside Québec
In general, persons that reside in Canada, outside Québec, can claim a rebate of the QST on tangible personal property purchased in and shipped outside Québec by completing form VD-352-V, Application for a Rebate of the QST Paid on Corporeal Movable Property That Is Taken or Shipped Outside Québec to Another Location in Canada by a Person Resident in Canada. If the tangible personal property is a road vehicle, form VD-60.R-V, Application for a QST Rebate for a Road Vehicle, must be completed.