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 outside Canada to a place in Canada, or from a place outside Canada to another place outside Canada. This includes a supply of a freight transportation service in respect of goods being held in bond that have not been released, as well as in-transit moves through Canada from a place outside Canada to another place outside Canada.

QST system

Under the QST system, freight transportation services are, as a rule, deemed to be supplied in Québec if the destination of the supply is located in Québec. This means that a freight transportation service is not subject to QST when supplied in respect of property that is transported from a place outside Québec to another place outside Québec (for example, a place outside Canada to a place in Canada, outside Québec).

However, a freight transportation service is deemed to be supplied outside Québec when supplied in respect of property that is transported from a place in Canada (outside Québec) to a place in Québec. This service is therefore not subject to QST. A freight transportation service is zero-rated when supplied in respect of property that is transported from a place outside Canada to a place in Québec.