QST Appendix

posted on October 25, 2012

Payment terms:

The QST on consideration for a supply is payable on the earlier of the day payment is made and the day the consideration becomes due, which is usually the day the supplier issues an invoice. The payment terms on an invoice are irrelevant.

If the University issues an invoice, dated December 31, 2012, with payment terms of net 60 then QST becomes payable on the date of the invoice. Since the invoice date is before January 1, 2013 QST at the rate of 9.5% should be charged. Note that the date the tax became payable (i.e., the invoice date) is earlier than the actual payment date.

Deposits:

There is no tax charged on deposits since deposits are not treated as a payment for a supply until they are applied against an actual purchase. Consequently, if the customer gave the University a deposit prior to January 1st, 2013 and the University then applies this deposit against a supply and an invoice is issued to the customer after January 1st, 2013, GST will be charged at 5 % & QST will be charged at 9.975%. (However, it is important to distinguish a deposit from the pre-payment of an invoice because, as mentioned above, in the case of an invoice that is prepaid prior to January 1st QST is to be charged at 9.5% on the portion prepaid and the remainder of the invoice, if dated on or after January 1st, 2013, is to be billed at 9.975%.)

Prepayment (advance payments):

If the customer made a prepayment to the University prior to January 1st, 2013,the University must charge QST at a rate of 9.5% on this prepayment and a QST rate of 9.975% on the remaining balance of the invoice if the invoice for the remainder of the payment is issued on January 1st, 2013 and thereafter.

As an example, if the University is charging registration fees for a seminar that is to be held after January 1, 2013 and participants register and pay the fees before January 1, 2013, the QST at a rate of 9.5% will apply to any fees paid before January 1, 2013, even if the seminar is held after that date.

Refunds:

When issuing a refund, GST & QST are to be calculated at the same rate that was charged when the original supply was paid or invoiced. Thus, if a customer is refunded after January 1st, 2013 for an invoice dated prior to January 1st, 2013, they are to be refunded GST at 5% & QST at 9.5% as per the original invoice.

Coin operated machines:

GST & QST is assumed to have been collected on supplies from these machines when the money is removed from the machines. Consequently, if the University removes monies from a vending machine on or after January 1st, GST is deemed to have been collected at the rate of 5% and QST at the rate of 9.975%.

Progress Billings (except for construction & renovation contract with a third party):

When progress payments are made under a contract, GST & QST is payable on the value of each payment on the earlier of the day on which it is paid and the day on which it is due. The increased rate of 9.975% QST will apply to progress payments made on or after January 1, 2013 (provided that they were not due before January 1, 2013) even though these payments may relate to work performed, or property delivered, before that date.

Progress Billings (construction & renovation contract with a third party):

A taxable supply in respect of the construction, renovation, alteration or repair of an immovable will be subject to the 9.975% QST rate if it is made pursuant to a written agreement entered into after December 31, 2012. If the agreement is entered into after December 31, 2011 and before January 1, 2013, it will be subject to 9.5% QST. If the agreement is entered into after December 31, 2010 and before January 1, 2012, it will be subject to 8.5% QST and if the agreement is entered into before January 1, 2011, the contract will be subject to QST at 7.5%.

If modifications are added to the original contract after December 31, 2012 and they don't change the nature of the original agreement, the modification will be subject to 9.5% QST rate. However, if the modifications are considered to change the nature of the contract, we would need to apply a QST rate of 9.975% on the additional amount. Our financial system cannot handle one contract with two QST rates, please contact Geneviève Desrosiers (ext.: 4720).

Leases:

The 9.975% QST rate will apply to a lease payment due on or after January 1, 2013, unless it was paid before that date. The 9.5% QST rate will apply to a lease payment due before January 1, 2013, even if it is paid after January 1, 2013.

Payments under a long-term written agreement (progress payment):

QST at the rate of 9.5% will apply to the monthly payments required to be made, under the agreement, before January 1, 2013. Payments required to be made on or after January 1, 2013 will be subject to QST at a rate of 9.975%.

Membership Fees, Ticket Sales and Subscriptions:

If the membership, ticket sale or subscription is paid or invoiced prior to January 1st, QST will be charged at 9.5% regardless of when the supply will actually be used or received. Thus, if the University issues an invoice dated in December 2012 for a gym membership covering January 2013 to December 2013, QST is to be charged at 9.5% since the invoice was dated prior to January 1st, 2013.

Delays in billing:

If there is an undue delay in issuing an invoice, QST becomes payable when the invoice would have been issued if there had been no delay. Thus, if under a written contract an invoice should have been issued on December 31th, 2012, but due to some unforeseen event is only issued after January 1st, 2013, QST is to be billed at 9.5% since per the terms of the contract the payment was due December 31th, 2012. In addition, if per the terms of the contract the payment is due after January 1st, 2013 and the University invoices the customer or the customer pays the amount prior to January 1st, 2013, QST is to be billed at 9.5%.

Deferred payment:

An override rule stipulates that if QST is not otherwise payable by the last day of the calendar month after the calendar month in which any of the following events takes place, it becomes payable on that day:

• In the case of a sale of tangible personal property, the buyer acquires ownership or possession of the property;
• In the case of a sale of tangible personal property on approval, consignment, sale-or-return basis or similar terms, the buyer acquires ownership of the property or re-supplies it to someone other than the seller; and
• In the case of a supply under a written agreement for construction, renovation, alteration or repair of real property or of a ship or other marine vessel when the work is reasonably expected to last more than three months, the work is substantially completed.

As an example, if the University enters into an agreement to sell goods but the customer does not have to make any payments until November 2013. (The customer actually receives ownership or possession of the goods but will not receive an invoice for payment until November 2013). If the customer received possession or ownership of the goods in December 2012, under a written agreement entered into in November 2012, the override rule stipulates that QST is considered payable at the end of January 2013. Since this date is after January 1, 2013, QST at the rate of 9.975% applies to the sale.

Holdback amount:

If it is legislatively sanctioned or provided for in a written agreement for the construction, renovation or repair of real property, QST calculated on the holdback amount becomes payable on the earlier of the day on which the holdback is paid or the day on which the holdback period expires. Therefore, if both of these days occur on or after January 1, 2013, QST rate of 9.975% will apply to the holdback amount.