Published | Category : GST and QST
Prearranged Funeral Services Contracts
Further to the agreement entered into by the federal and Québec governments to better harmonize the QST and GST systems, the rules that apply under the QST system to prearranged funeral services contracts will be harmonized with those that apply under the GST system. The GST and QST will therefore apply in the same fashion to such contracts entered into in Québec after December 31, 2012.
In addition to the determined amount for the property and services supplied, a funeral home can also collect an amount equal to the GST and QST. The moment at which such taxes must be reported varies depending on whether or not the amounts received from the buyer are held in trust.
Amounts held in trust
Where the amounts received by a funeral home as partial or total payment of a prearranged funeral services contract are deposited in trust by the funeral home in accordance with the Act respecting prearranged funeral services and sepultures, the funeral home does not have to report the GST and QST on such amounts in its GST and QST return for the period during which the buyer paid the amounts. In other words, the QST and GST do not apply to such amounts at the time they are received and deposited in trust by the supplier.
The GST and QST do apply, however, to any amounts withdrawn by the funeral home, from the funds held in trust under the Act, to cover the property and services supplied. Such is the case, for example, where amounts are withdrawn further to the buyer's death. The funeral home must therefore report the taxes on such amounts in its GST and QST return for the period during which the amount is paid to the funeral home or becomes due, whichever is earlier. In most cases, this reporting period is the one that includes the date on which the amounts are withdrawn.
Amounts not held in trust
A special rule applies where the funeral home receives amounts that it does not deposit in trust.
Where amounts are not held in trust, the funeral home must report the GST and QST on the amounts in its GST and QST return for the period during which the amount is paid or becomes due, whichever is earlier. In most cases, this reporting period is the one that includes the date on which the contributions are received.
For more information, refer to GST/HST Technical Information Bulletin B-091R, Application of the GST/HST to Prepaid Funeral Arrangements.