Domestic Outbound Services
GST system
Under the GST system, a freight transportation service is zero-rated when supplied in respect of goods that are transported from a place in Canada to another place in Canada, provided the following conditions are met:
- The property is exported, and the domestic transportation service is part of a continuous outbound freight movement.
- The value of the consideration for the supply is $5 or more.
- The shipper of the property provides the carrier with a written declaration that the property is being shipped for export and the freight transportation service is part of a continuous outbound freight movement. The shipper's declaration may be written on the bill of lading given to the first carrier, or on a separate document given to the carrier.
Under paragraph 7(a) of Part VII of Schedule VI of the Excise Tax Act, the shipper must provide the following written declaration:
The property is being shipped for export, and the freight transportation service to be supplied by the carrier is part of a continuous outbound freight movement of the property.
[Name of shipper or authorized representative]
[Signature of shipper or authorized representative]
If no such declaration is provided, the carrier must collect GST on any part of the freight transportation service that is supplied in Canada.
QST system
Under the QST system, a freight transportation service is zero-rated when supplied in respect of property that is transported from a place in Québec to another place in Québec, provided the following conditions are met:
- The property is taken or shipped outside Québec, and the service is part of a continuous freight movement out of Québec.
- The value of the consideration for the supply is $5 or more.
- If the property is being taken or shipped outside Canada, the shipper gives the carrier a completed copy of form VD-197-V, Declaration Concerning the Transportation of Corporeal Movable Property, as confirmation that the property is being taken or shipped outside Québec and that the freight transportation service to be supplied by the carrier is part of a continuous outbound freight movement. The declaration used under the GST system can also be used under the QST system.
Note that a freight transportation service is also zero-rated when supplied in respect of property that is transported from a place in Québec to another place in Québec, if the property is being taken or shipped outside Québec to a place in Canada and the service is part of a continuous freight movement out of Québec.