Public Service Bodies Registered for the GST and the QST

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If you wish to recover only the direct cost of a property or service, you may elect to make the sale of the property or service exempt, provided

  • you do not charge GST and QST, and the total price corresponds to the usual asking price and does not exceed its direct cost
  • you charge the taxes separately, and the price (excluding taxes) corresponds to the usual asking price and is less than its direct cost (excluding taxes). In this case, the taxes are considered to be collected in error

In all other cases, the sale will be taxable. See the summary table below.

Do not charge the taxesTotal price ≤ direct costExempt sale
Total price > direct costTaxable sale
Charge the taxesPrice (taxes excluded) < (direct cost − GST − QST)Exempt sale
Price (taxes excluded) ≥ (direct cost − GST − QST)Taxable sale
Example

You buy sweaters bearing your organization's logo for $15.66 apiece, plus $0.78 GST and $1.56 QST. The direct cost of each sweater is thus $18 ($15.66 + $0.78 + $1.56), that is, the purchase price plus the GST and QST.

  • If you sell the sweaters for $18 apiece and do not collect the GST and QST, the sale is exempt because the total price is equal to the direct cost. You can claim partial GST and QST rebates.
  • If you sell the sweaters for $15.66 apiece and collect $0.78 GST and $1.56 QST, the sale is taxable because the price (excluding taxes) is equal to the direct cost (excluding taxes). You must remit the taxes collected and you can claim an ITC and an ITR for the GST and the QST you paid when you bought the sweaters.

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