Use of Courtesy or Demonstration Vehicles

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As a motor vehicle dealer, you acquire vehicles for the purpose of resale. However, you may place some vehicles at the disposal of your employees or customers. If your business is a large business, you must remit the QST on each vehicle used in this way during a given month.

We consider that you have made a vehicle sale on the last day of the month. You are required to calculate and remit QST on 2.5% of the sum of the purchase price of the motor vehicle as if it had actually been collected. Any fraction of a month during which a vehicle is used for a purpose other than resale counts as a full month.

This rule applies until December 31, 2020, to vehicles made available to employees or customers. If you business is a large business, you must calculate and remit the QST on 2.5% of the purchase price of the motor vehicle made available to employees or customers in the given month. You can claim an ITR for the QST remitted, calculated at the applicable rate for the year in which the vehicle was made available to employees or customers (25% for 2018, 50% for 2019 and 75% for 2020).

These rules do not apply under the GST system.

Example

A dealer that is a large business places motor vehicle A (which has a purchase price, including GST, of $12,000) at the disposal of an employee on March 1, 2018.

On March 10, 2018, the vehicle is sold by the dealer in the ordinary course of the dealer's activities. On that date, the dealer places another vehicle, vehicle B (which has a purchase price, including GST, of $20,000), at the disposal of the employee.

On March 25, 2018, vehicle B is sold by the dealer, and another vehicle, vehicle C (which has a purchase price, including GST, of $15,000) is placed at the disposal of the employee. The employee has used three vehicles in the course of the same month. The dealer must therefore remit the QST to Revenu Québec for the month on the purchase price of the three vehicles as follows:

Vehicle A ($12,000 x 2.5%) $300.00
Vehicle B ($20,000 x 2.5%) + $500.00
Vehicle C ($15,000 x 2.5%) + $375.00
$1,175.00
QST payable ($1,175 x 9.975%) $117.21

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