Persons acting as broker drivers for interprovincial carriers have a specific set of rules they must follow. A broker driver is any person that, under the terms of a written contract with a carrier, agrees to provide a vehicle and the services of a driver under the direct control of the carrier.

Contracts with an interprovincial carrier operating more than 10 vehicles

A broker driver under contract with an interprovincial carrier operating more than 10 vehicles has to pay QST on the purchase of a vehicle in Québec. When the vehicle is purchased in another province, the driver must calculate the QST on the purchase and remit the tax to us. The amount of tax must be prorated based on the number of kilometres travelled in each province in which the vehicle is used.

This means that a motor carrier under contract with such a broker driver cannot reduce the amount of QST that must be remitted by any amount the broker driver remits as QST. The motor carrier must, however, obtain and keep proof that the tax was paid by the broker driver. Such proof may be requested in an audit.

Tax treatment of the reimbursement of a broker driver's expenses

Where an international or interprovincial carrier acquires transportation services under a contract with a broker driver, the latter is often required to reimburse the carrier for fuel and insurance expenses. The following sections explain how the GST and the QST apply to such expenses, as well as to administrative expenses.

Fuel expenses

The carrier must collect GST and QST from the broker driver on the amount of fuel expenses that the latter reimburses to the carrier, except in the case of fuel purchased from retailers outside Canada (outside Québec, for QST purposes).

Insurance expenses

The broker driver generally agrees to be insured under the carrier's policy and to reimburse the carrier for the portion of the insurance premium that applies to the broker driver. The carrier must collect GST and QST on the portion of the insurance expenses the carrier bills to the broker driver.

Administration expenses

The carrier must collect GST and QST on administration expenses that the carrier bills to the broker driver.