Generally, deposits on beverage containers are not GST- or QST-taxable. For more information, refer to technical information bulletin B-089, Returnable Containers.
Other returnable containers or packages, such as oil drums and helium or oxygen cylinders, are generally considered to be part of the goods they contain, and the taxes apply to the container or package in the same way as they do to its contents. For example, a container filled with medical oxygen is zero-rated, because medical oxygen is zero-rated; if sold empty, such a container is subject to 5% GST and 9.975% QST.
When a container or package is returned, it can be treated in one of two ways:
- The purchaser of the container or package is deemed to have resold it to the original supplier and, if registered, must collect GST and QST from the supplier. The supplier, if registered, may claim an input tax credit (ITC) and an input tax refund (ITR) for the taxes paid on repurchasing the container or package.
The amount paid by the supplier on the return of the container or package is deemed a refund made by the supplier to the purchaser. The following rules apply:
If the supplier and the purchaser are both registrants and have remitted the GST and the QST to Revenu Québec or have claimed an ITC or an ITR for the taxes paid, the supplier must refund to the purchaser the deposit paid on the package or container, but does not have to refund the GST and QST paid at the time of purchase. In this case, there is no need to provide a credit or debit note and the refund of the deposit has no impact on the calculation of net tax in the GST and QST returns of the supplier and the purchaser.
If the supplier credits or refunds the purchaser the GST and the QST previously paid by the latter, a credit or debit note must be provided. In addition, the supplier and the purchaser must adjust their GST and QST returns for the period in which the note was provided. The supplier may deduct the amounts of GST and QST credited or refunded in the calculation of the supplier's net tax, and the purchaser must include the amounts in the calculation of the supplier's net tax.
Where goods are sold in a container or package other than the one in which they are usually sold, and the package or container is sold with the goods as a single item, the following rules apply:
- If the package or container can be considered incidental to the goods, the GST and QST will apply to the package or container if the taxes apply to the contents.
- If the package or container cannot be considered incidental to the goods, it is subject to GST and QST separately from its contents and regardless of whether the contents are taxable. In this case, the taxes must be collected on the portion of the sale price that pertains to the package or container.