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Place of Supply: Sale of Tangible Personal Property and the Supply of Freight Transportation Services

The goods and services tax (GST) and the Québec sales tax (QST) apply to most supplies of goods and services made in Québec. The GST also applies in other non-participating provinces. The harmonized sales tax (HST) applies to the supply of goods and services made in participating provinces according to the rate in force in each of these provinces.

You must know the place of supply to determine whether the GST, QST or HST applies to a given supply. The place of supply rules determine whether the sale of tangible personal property (or corporeal movable property) or freight transportation services is considered made in Québec, in another non-participating province, in a participating province or outside Canada. Note that these rules have not changed since the HST came into effect in British Columbia and Ontario.

Sale of tangible personal property

The sale of tangible personal property is considered made in a given province if the supplier delivers the property to the purchaser in that province or makes the property available to the purchaser in that province.

Example
A supplier in Québec sells a TV to a person in Manitoba. The sales contract states that the TV will be delivered to the purchaser in Manitoba. The sale of the good is thus considered made in Manitoba. Consequently, the supplier must collect the GST from the purchaser at a rate of 5% applied to the sale price of the TV.

Tangible personal property is also considered delivered in a given province if the supplier

  • ships the property to a destination in the province specified in the contract for carriage of the property or transfers possession of the property to a common carrier or consignee that the supplier has retained on behalf of the purchaser to ship the property to such a destination; or
  • sends the property by mail or courier to an address in the particular province.
Example
A supplier in Québec sells a CD to a person in Ontario. The two parties agree that the supplier will mail the CD to the purchaser's address in Ontario. The sale of the CD is, therefore, deemed made in Ontario. Consequently, the supplier must collect the HST from the purchaser at a rate of 13% applied to the retail price of the CD.

Supply of freight transport services

Freight transport services are considered supplied in a given province if the delivery point is in said province.

Examples

An individual in Québec hires a business that offers courier services to transport a package from Québec to a destination in Alberta. The supply is, therefore, considered made in Alberta because the destination is in that province. Consequently, the business must collect the GST from the client at a rate of 5% applied to the price of the service.

An individual in Québec hires a shipper to transport TVs to New Brunswick. The freight transport service is considered supplied in New Brunswick because the location to which the TVs are delivered is in that province. Consequently, the shipper must collect the HST from the purchaser at a rate of 13% applied to the supply of the service.

For more information, see the booklet IN-203-V, General Information Concerning the QST and the GST/HST,and Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.

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