Revenu Québec Infos

For the purposes of the Fuel Tax Act, butane is considered to be gasoline.

The sale of butane is exempt from the fuel tax when sold to a consumer in a container

• used exclusively for supplying the heating system of an immovable; or
• used for any purpose other than supplying an internal combustion engine.

This exemption is applicable only at the time of the retail sale of butane, as it is impossible for the vendor to determine whether the above conditions are met under any other circumstances.

Consequently, the fuel tax does apply to the sale of butane for resale purposes. The holder of a collection officer's permit must report all such butane transactions and collect an amount equal to the tax on these transactions, as with the sale of any other fuel.  Information relating to butane should be entered in the fields reserved for gasoline on fuel tax returns.  

However, Revenu Québec considers the sale of butane for resale purposes to be exempt from the fuel tax if

• the butane is sold in the same container in which it will be sold to consumers; and
• the container is used exclusively for supplying the heating system of an immovable or for any purpose other than supplying an internal combustion engine.

For example, the sale for resale purposes of butane canisters used for camping purposes is exempt from the fuel tax.

The changes to the Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) for 2014 are given below.

Variable E

The indexation factor used to calculate the value of personal tax credits for 2014 is 0.97%.

Variables F and F2

The voluntary retirement savings plan (VRSP) contribution and the pooled registered pension plan (PRPP) contribution have been added to variables F and F2. For more information, see section 2.13 of the Guide for Employers (TP-1015.G-V) for 2014.

Variables H, H1 and H2 – Deduction for employment income

For 2014, the maximum deduction for employment income has been increased from $1,100 to $1,110. Consequently, the maximum amount of variables H, H1 and H2 has been increased from $1,100 to $1,110.

Variable K – The constant for adjusting the income tax rate

For 2014, the income tax rates applicable to taxable income brackets remain unchanged and the income thresholds for these brackets have been indexed. Specifically,

• the 16% rate applies to taxable income of $41,495 or less (previously $41,095); 
• the 20% tax rate applies to taxable income of more than $41,495, but not more than $82,985 (previously $82,190); 
• the 24% tax rate applies to taxable income of more than $82,985, but not more than $100,970 (previously $100,000); 
• the 25.75% applies to taxable income of more than $100,970.

Consequently, the values of variable K are now $1,659 (increased from $1,644), $4,979 (increased from $4,931) and $6,746 (increased from $6,681).

Variable M – QPP

The QPP contribution rate has been increased from 10.20% to 10.35% for 2014, which corresponds to a rate of 5.175% for an employee and of 5.175% for an employer. In addition, the maximum pensionable earnings for the purposes of the QPP have been increased from $51,100 to $52,500. Variable M has therefore been increased from $2,427.60 to $2,535.75.

Variables N and N1 – QPIP

For 2014, the maximum insurable earnings subject to QPIP premiums have been increased from $67,500 to $69,000. The employee premium rate remains 0.559% and the employer premium rate remains 0.782%. Consequently, variable N has been increased from $377.33 to $385.71 and variable N1 has been increased from $527.85 to $539.58.

Variable Z – Health contribution

For 2014, the net income thresholds, the rates and the amounts used to calculate the value of the health contribution (variable Z) remain unchanged.

Estimated annual net income (R) Health contribution (Z) $18,175 or less $0 More than $18,175 but no more than $40,390

Whichever is less:

• $100;
• 5% × (R - $18,175).

More than $40,390 but not more than $131,260

Whichever is less:

• $200;
• $100 + [5% × (R - $40,390)].

More than $131,260

Whichever is less:

• $1,000;
• $200 + [4% × (R - $131,260)].

As indicated in the article Sale of Property by a Financial Services Provider published on July 25, 2013, a financial services provider whose QST registration was cancelled on January 1, 2013, because that provider was not a GST/HST registrant, does not have to collect the QST on the sale of property (such as a list of customers) that meets the conditions listed in that article.

The purchaser of the property, for which the supplier did not have to collect QST, does not have to self-assess the QST.

We wish to reiterate that a financial services provider that remained a QST registrant on January 1, 2013, must collect the QST on the sale of movable property, other than capital property, that the provider owned before that date, even though the provider does not have to collect the GST.

Rates, thresholds and amounts related to source deductions and contributions for 2014 are listed below.

Indexation for 2014

Every year, the personal income tax system is automatically indexed. The indexation factor for 2014 is 0.97%.

Income tax rates and income thresholds

For 2014, the income tax rates applicable to the taxable income brackets remain unchanged and the income thresholds for these brackets have been indexed. Specifically,

• the 16% rate applies to taxable income of $41,495 or less (previously $41,095);
• the 20% rate applies to taxable income of more than $41,495, but not more than $82,985 (previously $82,190);
• the 24% rate applies to taxable income of more than $82,985, but not more than $100,970 (previously $100,000);
• the 25.75% rate applies to taxable income of more than $100,970.

Source Deductions Return (form TP-1015.3-V)

The Source Deductions Return (form TP-1015.3-V) has been revised for 2014 to take into account the indexation of the amounts appearing on it.

The indexed amounts used to determine deduction codes for 2014 are shown in the table below. The figures for 2013 are provided for information purposes.

Amounts for the calculation of source deductions of income tax 2014 2013 Basic amount $11,305 $11,195 Amount transferred from one spouse to the other $11,305 $11,195 Amount for other dependants who are 18 or older $3,035 $3,005 Amount for a child under 18 enrolled in post-secondary studies $2,085 $2,065 Additional amount for a person living alone (single-parent family) $1,640 $1,625 Amount for a severe and prolonged impairment in mental or physical functions $2,570 $2,545 Amount for a person living alone $1,325 $1,310 Age amount $2,435 $2,410 Amount for retirement income $2,160 $2,140 Reduction threshold used to calculate the net family income (This income is used to calculate the age amount, amount for a person living alone and amount for retirement income.) $32,795 $32,480 Gratuities and retroactive pay

The threshold to determine the method to be used to calculate the source deduction of income tax from gratuities and retroactive pay has been increased from $14,000 to $14,130 for 2014.

Maximum deduction for employment income

The maximum deduction for employment income has been increased from $1,100 to $1,110 for 2014

Amount paid to an emergency services volunteer

The tax-exempt financial compensation paid to an emergency services volunteer has been increased from $1,100 to $1,110 for 2014.

Maximum pensionable earnings and QPP contribution rate

For 2014, the maximum pensionable earnings for the purpose of the QPP have been increased from $51,100 to $52,500 and the QPP contribution rate has been increased from 10.20% to 10.35%, which corresponds to a contribution rate of 5.175% for the employee and 5.175% for the employer. The maximum annual contribution to be withheld for any employee has therefore been increased from $2,427.60 to $2,535.75.

Maximum insurable earnings and QPIP premium rate

For 2014, the maximum insurable earnings for the purpose of the QPIP have been increased from $67,500 to $69,000. The employee premium rate remains 0.559% and the employer premium rate remains 0.782%. As a result, the maximum annual employee premium is $385.71 (instead of $377.33) and that of the employer is $539.58 (instead of $527.85).

Maximum remuneration subject to the contribution to the financing of the CNT

The portion of the remuneration in excess of $69,000 (instead of $67,500) is not subject to the contribution to the financing of the CNT for 2014.

Further to the increase in the specific tax on alcoholic beverages announced in the 2013-2014 Budget Speech, persons selling alcoholic beverages have until November 21, 2013, to remit the amount calculated after taking inventory of their alcoholic beverages in stock at 3:00 a.m. on November 21, 2012. 

The benefits paid to the parents of a crime victim by Employment and Social Development Canada, under the Federal Income Support for Parents of Murdered or Missing Children program as a result of a Criminal Code offence, must be entered in box O of the RL-1 slip. The code corresponding to these benefits is CD.

If you pay operating costs for an automobile made available to an employee, you must include an operating-costs benefit in the employee's income. On January 1, 2013, the per-kilometre rate used to calculate that benefit was increased from $0.26 to $0.27. For employees engaged principally in selling or leasing automobiles, the per-kilometre rate was increased from $0.23 to $0.24.

On January 1, 2013, the per-kilometre rate that you pay an employee as an allowance for the use of a motor vehicle and that we consider reasonable was increased from $0.53 to $0.54 for the first 5,000 kilometres and from $0.47 to $0.48 for each additional kilometre.

You may obtain a refund of the fuel tax paid on gasoline acquired after July 11, 2013, and used to supply the engine of a commercial vessel.

In order for you to be entitled to the refund, the gasoline must have been poured directly from the retail dealer's delivery nozzle into the tank installed as standard equipment for supplying the engine of the commercial vessel. Thus, the gasoline must not have come from your own storage tank.

Note

The term "commercial vessel" includes every vessel used principally for purposes other than for pleasure.

To claim the refund, you must complete form CA-10.C-V, Application for a Fuel Tax Refund in Respect of Gasoline Used To Supply the Engine of a Commercial Vessel.

A corporation or partnership that, after November 20, 2012, carries out a large investment project ($200 million or more) in Québec may, under certain conditions, be entitled to a 10-year tax holiday. This tax holiday consists of a deduction in the calculation of the corporation's taxable income and an exemption from the employer contribution to the health services fund with regard to the eligible activities relating to such a project. 

Conditions to be met 

A corporation or a partnership may be exempted from the contribution to the health services fund on the salary and wages paid to an employee for the time that employee spends on eligible activities of the corporation or partnership, where

• the corporation or the partnership holds
  • an initial certificate from the Ministère des Finances et de l'Économie, and
  • an annual certificate for the taxation year from that Ministère;
• the salary or wages are for a pay period included in the exemption period covered by the annual certificate issued for the year concerned, and do not include
  • the wages paid to an employee whose duties consist in building, expanding or modernizing the site where the large investment project will  be carried out,
  • directors' fees,
  • bonuses,
  • taxable benefits,
  • incentives and commissions (except if the employee's duties relate to the commercialization of the activities or products of the business related to the large investment project).

If the pay period does not fall entirely within the exemption period, only the portion of the salary or wages related to the exemption period is exempt from the employer contribution to the health services fund.

The corporation or partnership must enclose with form RLZ-1.S-V, Summary of Source Deductions and Employer Contributions, a copy of the annual certificates and, where applicable, a copy of the partnership agreement for the calendar year for which the corporation or partnership is applying for the exemption from the employer contribution to the health services fund.

The total amount of tax assistance (related to income tax and employer contributions to the health services fund) granted for a large investment project cannot exceed 15% of the total eligible investment expenditures related to such a project. The tax assistance that a corporation or partnership may receive for its taxation year or fiscal period, for a large investment project, cannot exceed an amount corresponding to its tax assistance cap for its taxation year or fiscal period for such a project.

To apply for an initial certificate or an annual certificate, go to the website of the Ministère des Finances et de l'Économie.

For more information, refer to the Guide de la déclaration de revenus des sociétés (CO-17.G).

The tax measure providing for a ten-year exemption from the contribution to the health services fund for a corporation or partnership that operates a business carrying out a major investment project has been eliminated. However, a corporation or a partnership that held, on November 20, 2012, an initial qualification certificate from the Ministère des Finances et de l'Économie and that held, for the year, an annual qualification certificate from the Ministère may continue to be eligible for this exemption under the previous terms and conditions.

Starting this year, all employers will receive the new, streamlined Employer's Kit (including form RLZ-1.S-V, Summary of Source Deductions and Employer Contributions) by mail.

As of mid-November, employers can consult the Employer's Kit on our website to obtain all the up-to-date information they need to fulfil their obligations. The online Employer's Kit contains all the online services and documents necessary to file RL-1 slips and the RL-1 summary, and calculate source deductions and employer contributions.

The guides and the source deduction and employer contribution tables can no longer be ordered. These documents are only available on our website.

The value of the benefit from amounts paid by an employer to acquire, on behalf of an employee, a share or fraction of a share issued by the Fonds de solidarité FTQ or by Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi, after December 31, 2012, is no longer subject to Québec Pension Plan (QPP) contributions, the contribution to the health services fund, the contribution to the financing of the Commission des normes du travail (CNT) and the contribution to the Workforce Skills Development and Recognition Fund (WSDRF). The benefit constitutes a benefit in kind that is not subject to Québec parental insurance plan (QPIP) premiums. You must include the value of the benefit in boxes A and L of the RL-1 slip.

Even if you are not required to withhold or remit QPP contributions, this benefit represents pensionable salary for the employee. You must therefore enter "G-1" in a blank box of the RL-1 slip, followed by the amount of the benefit. Consequently, the employee who has not reached his or her maximum QPP contribution for the year may make an optional contribution to the QPP on this amount when filing his or her income tax return.

A temporary refundable tax credit for eco-friendly home renovation has been introduced.

The tax credit is intended for individuals who have a qualified contractor carry out eco-friendly renovation work on their principal place of residence or cottage under a contract entered into after October 7, 2013, and before November 1, 2014.

The amount of the tax credit corresponds to 20% of the portion of an individual's eligible expenses that exceeds $2,500, up to a maximum tax credit of $10,000 per eligible dwelling.

To qualify for the tax credit, the work must have a positive environmental impact or improve the dwelling's energy efficiency, and the materials and appliances involved must meet recognized environmental and energy standards.

The contractor that carried out the work must certify that those standards are met by completing and signing form TP-1029.ER.A-V, Certificate of Compliance With Energy and Environmental Standards, and giving it to the individual for whom the work was done.

The various types of recognized eco-friendly renovation work are listed below.

For more information, contact us.

Recognized eco-friendly renovation work A. Work relating to the envelope of the dwelling A1 Insulation of the roof, exterior walls, foundations and exposed floors

• The insulation materials used for insulation must not contain urea formaldehyde or they must have low levels of volatile organic compounds (VOC) certified GREENGUARD or EcoLogo environmental choice. In addition, the insulating value must satisfy the following standards:
  • insulation of the attic: the insulating value achieved must be at least R-41 (RSI 7.22);
  • insulation of the flat roof or cathedral ceiling: the insulating value achieved must be at least R-28 (RSI 4.93);
  • insulation of the exterior walls: the increase in the insulating value must be at least R-3.8 (RSI 0.67);
  • insulation of the basement (including the header area): for the walls, the insulating value achieved must be at least R-17 (RSI 3.0), while for the header area, the insulating value achieved must be at least R-20 (RSI 3.52);
  • insulation of the crawl space (including the header area): for the exterior walls (including header area), the insulating value achieved must be at least R-17 (RSI 3.0), while for the floor area above the crawl space, the insulating value achieved must be at least R-24 (RSI 4.23);
  • insulation of exposed floors: the insulating value achieved must be at least R-29.5 (RSI 5.20).

A2 Sealing

• Water-proof sealing of the foundations.
• Air sealing of the envelope of the dwelling or of a portion of it (walls, doors, windows, skylights, etc.).

A3 Installation of doors or windows

• Replacement or addition of doors, windows and skylights with ENERGY STAR qualified models for the climate zone where the dwelling is located.

B. Work relating to the mechanical systems of the dwelling B1 Heating system

• Replacement of a propane or natural gas heating system appliance with one of the following appliances using the same fuel:
  • an ENERGY STAR qualified furnace with an annual fuel utilization efficiency (AFUE) of at least 95% and equipped with a brushless direct current (DC) motor;
  • a zero-clearance furnace with an AFUE of at least 95%, if the dwelling is a mobile home;
  • an ENERGY STAR qualified boiler with an AFUE of at least 95%.
• Replacement of an indoor wood-burning system or appliance with one of the following:
  • an indoor wood-burning system or appliance that complies with the CSA-B415.1-10 standard or the 40 CFR Part 60 Subpart AAA standard of the Environmental Protection Agency (EPA) of the United States on wood-burning appliances. However, appliances not tested by the EPA are not eligible unless they have been certified under the CSA-B415.1-10 standard;
  • an indoor pellet-burning appliance (including stoves, furnaces and boilers that burn wood, corn, grain or cherry pits);
  • an indoor masonry heater.
• Replacement of a solid fuel-fired outdoor boiler with an outdoor wood-burning heating system that complies with the CAN/CSA-B415.1 standard or the Outdoor Wood-fired Hydronic Heater program of the Environmental Protection Agency (EPA) (OWHH Method 28, phase 1 or 2), provided the capacity of the new system is equal to or smaller than the capacity of the one it replaces.
• Installation of an ENERGY STAR qualified central split or ductless mini-split air-source heat pump including an outdoor unit and at least one indoor head per floor (excluding the basement) that has an Air-Conditioning, Heating, and Refrigeration Institute (AHRI) number and satisfies the following minimum requirements:
  • a Seasonal Energy Efficiency Ratio (SEER) of 14.5;
  • an Energy Efficiency Ratio (EER) of 12.0;
  • a Heating Seasonal Performance Factor (HSPF) of 7.1 for region V;
  • a heating capacity of 12 000 Btu/h.
• Installation of a geothermal system certified by the Canadian GeoExchange Coalition (CGC). A CGC-certified company must install the heat pump in accordance with the CAN/CSA-C448 standard. The CGC must also certify the system after installation.
• Replacement of the heat pump of an existing geothermal system. A company certified by the Canadian GeoExchange Coalition (CGC) must install the heat pump in accordance with the CAN/CSA-C448 standard.
• Replacement of a heating oil system with a system using propane or natural gas or replacement of a propane heating system with a system using natural gas, provided the new system uses one of the following heating appliances:
  • an ENERGY STAR qualified furnace with an annual fuel utilization efficiency (AFUE) of at least 95% and equipped with a brushless direct current (DC) motor;
  • a zero-clearance furnace with an AFUE of at least 95%, if the dwelling is a mobile home;
  • an ENERGY STAR qualified boiler with an AFUE of at least 95%.
• Replacement of a heating oil, propane or natural gas system with a system using electricity.
• Replacement of a heating oil, propane, natural gas or electricity system with a qualified integrated mechanical system (IMS) that is CSA-P.10-07 certified and achieves the premium performance rating.(1)
• Installation of solar thermal panels that comply with the CAN/CSA-F379 standard.
• Installation of combined photovoltaic-thermal solar panels that comply with the CAN/CSA-C61215-08 and CAN/CSA-F379 standards.

B2 Cooling system

• Replacement of a window air-conditioning unit or central air-conditioning system with an ENERGY STAR qualified central split or ductless mini-split air-conditioning system including an outdoor unit and at least one indoor head per floor (excluding the basement), provided the appliance has an Air-Conditioning, Heating, and Refrigeration Institute (AHRI) number and satisfies the following minimum requirements:
  • a Seasonal Energy Efficiency Ratio (SEER) of 14.5;
  • an Energy Efficiency Ratio (EER) of 12.0.
• Replacement of a central air-conditioning system with an ENERGY STAR qualified central split or ductless mini-split air-source heat pump including an outdoor unit and at least one indoor head per floor (excluding the basement) that has an Air-Conditioning, Heating, and Refrigeration Institute (AHRI) number and satisfies the following minimum requirements:
  • a Seasonal Energy Efficiency Ratio (SEER) of 14.5;
  • an Energy Efficiency Ratio (EER) of 12.0;
  • a Heating Seasonal Performance Factor (HSPF) of 7.1 for region V;
  • a heating capacity of 12 000 Btu/h.

B3 Hot water system

• Replacement of a propane or natural gas water heater with one of the following appliances using the same fuel:
  • an ENERGY STAR qualified instantaneous water heater that has an energy factor (EF) of at least 0.82;
  • an ENERGY STAR qualified instantaneous condensing water heater that has an EF of at least 0.90;
  • a condensing storage-type water heater that has a thermal efficiency of at least 95%.
• Replacement of an oil-fired water heater with a water heater using propane or natural gas or replacement of a propane-fired water heater with a water heater using natural gas, provided the new water heater is one of the following:
  • an ENERGY STAR qualified instantaneous water heater that has an energy factor (EF) of at least 0.82;
  • an ENERGY STAR qualified instantaneous condensing water heater that has an EF of at least 0.90;
  • a condensing storage-type water heater that has a thermal efficiency of at least 95%.
• Replacement of a heating oil, propane or natural gas water heater with a water heater using electricity.
• Installation of a solar hot water system that provides a minimum energy contribution of seven gigajoules per year (GJ/yr) and is CAN/CSA-F379 certified, provided such system appears on the CanmetENERGY Performance Directory of Solar Domestic Hot Water Systems.
• Installation of a drain-water heat recovery system.
• Installation of solar thermal panels that comply with the CAN/CSA-F379 standard.
• Installation of combined photovoltaic-thermal solar panels that comply with the CAN/CSA-C61215-08 and CAN/CSA-F379 standards.

B4 Ventilation system

• Installation of an ENERGY STAR qualified heat recovery ventilator or energy-recovery ventilator certified by the Home Ventilating Institute (HVI) and listed in Section 3 of their product directory (Certified Home Ventilating Products Directory). In addition, where installation makes it possible to replace an older ventilator, the new appliance must be more efficient than the older one.

C.   Water conservation and quality

• Installation of an underground rain water recovery tank.
• Construction, renovation, modification or rebuilding of a system for the discharge, collection and disposal of waste water, toilet effluents or grey water in accordance with the Regulation respecting waste water disposal systems for isolated dwellings.(2)
• Restoration of a buffer strip in accordance with the requirements of the Protection Policy for Lakeshores, Riverbanks, Littoral Zones and Floodplains.(3)

D. Soil quality

• Decontamination of fuel oil-contaminated soil in accordance with the requirements of the Soil Protection and Contaminated Sites Rehabilitation Policy.(4)

E. Other

• Construction of a green roof.(5)
• Installation of photovoltaic solar panels that comply with the CAN/CSA-C61215-08 standard.
• Installation of a domestic wind turbine that complies with the CAN/CSA-C61400-2-08 standard.

(1) This system encompasses the domestic heating, ventilation and heat recovery functions.

(2) CQLR, chapter Q-2, r. 22.

(3) CQLR, chapter Q-2, r. 35. This policy is applied in accordance with municipal zoning and urban planning bylaws.

(4) This policy is published by Les Publications du Québec and is available on the Ministère du Développement durable, de l'Environnement, de la Faune et des Parcs website at www.mddefp.gouv.qc.ca/sol/terrains/politique-en/.

(5) For greater clarity, a green roof is a roof that is fully or partially covered with vegetation and that includes a waterproof membrane, a drainage membrane and a growth medium to protect the roof and host vegetation.

Where a merchant or dealer registered for the goods and services tax (GST) and the Québec sales tax (QST) is selling or leasing tangible personal or corporeal movable property and accepts pre-owned tangible personal or corporeal movable property as full or partial payment of the transaction, the credit the merchant or dealer grants for the property traded in may, under certain circumstances, reduce the amount on which the GST and QST in respect of the sale or lease of the property are calculated.

Often called the "trade-in rule," this rule applies, for example, where a used road vehicle is given to a car dealer by a person acquiring a new vehicle.

Under the Comprehensive Integrated Tax Coordination Agreement Between the Government of Canada and the Government of Québec, the Québec government generally agreed that, effective January 1, 2013, results under the QST system would be identical to those under the GST/HST system.

Since that date, the trade-in rule has been applicable only where the person acquiring property by way of sale or lease is the owner of the property traded in. That condition must be met in order for the GST and QST in respect of the sale or lease of the property to be calculated on a reduced amount.

Every non-profit corporation must file with us a duly completed information and income tax return, or income tax return, along with its complete financial statements, on or before the day that is six months after the end of the corporation's taxation year.

An information and income tax return for non-profit corporations (form CO-17.SP, Déclaration de revenus et de renseignements des sociétés sans but lucratif) must be completed if the corporation is exempt from income tax and

• is not claiming any refundable tax credits, or
• is not subject to any other tax under the Taxation Act.

That return is the means by which such a corporation can meet its obligations

• to file an income tax return as a corporation;
• to file an information return as a tax-exempt corporation; and
• to pay the annual registration fee due under the Act respecting the legal publicity of enterprises.

A corporation income tax return (form CO-17, Déclaration de revenus des sociétés) and, where applicable, an information return for tax-exempt entities (form TP-997.1, Déclaration de renseignements des entités exonérées d'impôt) must be completed if the corporation

• is exempt from income tax and is claiming one or more refundable tax credits;
• is exempt from income tax but is subject to one or more other taxes under the Taxation Act; or
• is not tax-exempt.

If the principal object of a non-profit corporation is to provide recreational, sports or dining facilities to its members, an inter vivos trust is considered to have been created. In that case, the corporation must also file a trust income tax return (form TP-646, Déclaration de revenus des fiducies) within 90 days after the end of the calendar year.

For more information, click Non-Profit Organizations.

Large businesses will no longer be able to use the simplified method for large businesses (LB simplified method) to calculate an input tax refund (ITR) in respect of expenses incurred by and allowances paid to employees on or after January 1, 2014.

As of that date, the factor method used to claim an input tax credit under the GST system may be used under the QST system by small, medium-sized and large businesses. The latter will have to take into account the ITR restrictions applicable to large businesses. The method will be known as the "QST factor method."

For more information about the factor method used under the GST system, see the Canada Revenue Agency's GST/HST Memorandum 9.4, Reimbursements.

QST factor method Expense reimbursements

Under certain circumstances, an employer who reimburses an expense incurred by an employee on or after January 1, 2014, will be able to claim an ITR calculated using either the actual amount of QST paid or the QST factor method. For more information about those circumstances, see the brochure entitled General Information Concerning the QST and the GST/HST (IN-203-V).

The following are some aspects of the QST factor method:

• The factor applicable to a reimbursement will be 9/109.
• At least 90% of the expenses reimbursed will have to be expenses relating to taxable supplies, other than zero-rated supplies, of property or services acquired by an employee in Québec.
• Small and medium-sized businesses will be subject to a limit on entertainment expenses varying between 1.25% and 2% of their gross revenue.
• Large businesses will have to respect the ITR restrictions that apply specifically to them, for example, regarding expenses related to the use of road vehicles weighing less than 3,000 kilograms and the fuel used to power the engines of such vehicles, as well as certain food, beverage and entertainment expenses.

Revenu Québec will grant persons who use the QST factor method the same exemption from documentary requirements as is granted by the Canada Revenue Agency. For more information, see GST/HST Memorandum 8.4, Documentary Requirements for Claiming Input Tax Credits.

Expense allowances

The QST factor method will not apply to the calculation of an ITR in respect of an expense allowance. Therefore, an ITR equal to 9.975/109.975 of the allowance may be claimed, under certain conditions, in respect of an allowance paid on or after January 1, 2014. For more information about the conditions, see the brochure entitled General Information Concerning the QST and the GST/HST (IN-203-V).

The tables below summarize the principal ITRs that businesses may claim in respect of expenses incurred by and allowances paid to employees on or after January 1, 2014.

ITRs in respect of reimbursements of expenses incurred on or after January 1, 2014, based on the calculation method Examples of categories Large businesses Small and medium-sized businesses Actual amount of QST paid QST factor method Actual amount of QST paid QST factor method Meals No ITR (restriction applicable to large businesses) No ITR (restriction applicable to large businesses) QST paid subject to any restrictions that may apply
9/109 of the reimbursement subject to any restrictions that may apply Lodging QST paid 9/109 of the reimbursement QST paid 9/109 of the reimbursement Transportation (train, bus, airplane) QST paid 9/109 of the reimbursement QST paid 9/109 of the reimbursement ITRs in respect of expense allowances paid on or after January 1, 2014 Examples of categories Large businesses Small and medium-sized businesses Meals No ITR (restriction applicable to large businesses)
9.975/109.975 of the allowance subject to any restrictions that may apply Kilometres travelled No ITR (restriction applicable to large businesses)
9.975/109.975 of the allowance Lodging 9.975/109.975 of the allowance 9.975/109.975 of the allowance Transportation (train, bus, airplane) 9.975/109.975 of the allowance 9.975/109.975 of the allowance

If you operate a hotel establishment, tourist home, bed and breakfast establishment, hospitality village or another sleeping-accommodation establishment such as a rooming house, then you should take note of the information below about the application of the GST, the QST and the tax on lodging.

GST and QST

You must register for the GST/HST and QST if the total taxable worldwide supplies (This link will open a new window) you made in a given calendar quarter or in the four-quarter period that precedes a given calendar quarter, including supplies made by your associates, is greater than $30,000.

If this is your situation, you must collect the GST and QST and remit them to us using the GST/HST-QST Return (form FPZ-500-V). You can also recover the taxes you pay on the purchase of goods and services that you use in the operation of your business by claiming input tax credits (ITCs) under the GST/HST system and input tax refunds (ITRs) under the QST system.

However, if the total taxable worldwide supplies you made in a given calendar quarter or in the four-quarter period that precedes a given calendar quarter does not exceed $30,000, you are considered a small supplier. As a small supplier, you are not required to register for the GST/HST or QST. If you do not register for the GST/HST and QST, you are not required to collect or remit the GST/HST or QST and you cannot claim ITCs or ITRs for the GST/HST or QST you pay on your purchases.

Tax on lodging

If you operate an establishment in a region where the tax on lodging applies, you must register for that tax, regardless of your total taxable supplies. You need only register once for all your establishments, even if you operate establishments in more than one tourism region in which the tax on lodging applies. However, upon registration, you must indicate where each of your establishments is located.

The tax on lodging must be collected every time an accommodation unit (This link will open a new window) is supplied for more than six hours per 24-hour period in a sleeping-accommodation establishment (This link will open a new window). To charge the tax on lodging, you must use the amount or rate in effect in the tourism region in which your sleeping-accommodation establishment is located. You must collect the tax and remit it to us every three months using the Return Respecting the Tax on Lodging (form VDZ-541.26-V). You must file the return with us by the last day of the month following the calendar quarter for which the return is being filed.

Please keep in mind that the revenue from the tax on lodging finances the tourism partnership fund that was set up to support and promote the Québec tourism industry.

For more information, see the brochures IN-202-V, Should I Register with Revenu Québec? and IN-260-V, Tax on Lodging. You can also contact us.

Supplies of music lessons to individuals are exempt from GST and QST.

For GST and QST purposes, we consider a music lesson to be an activity designed to develop or improve a skill in order to reach a specific goal. Thus, music lessons must include formal instruction to develop skills in music performance, such as singing, playing an instrument or conducting an orchestra, or in music composition.

However, music lessons do not include instruction to develop or improve skills in any of the following areas:

• music recording
• music history
• music instruction techniques

Furthermore, activities that involve music are not necessarily considered music instruction services or music lessons. For example, activities that involve entertainment or music appreciation, or recreational activities that include music, such as ballroom dancing or aerobics, are not considered music lessons.

The following questions will help you determine whether or not an activity or program constitutes a music lesson:

• Does the supplier provide instruction in clearly defined musical skills or concepts?
• Is the program conducted in a structured and sequential manner with specific goals?
• Do students first have to take an exam or be assessed so that the instructor can determine their appropriate level of instruction?
• During or at the end of the program, does the instructor give feedback to the students regarding their progress? Or does the instructor assess their progress by having them take exams?
• Has the instructor received music training? For example, does the instructor have a degree in music?
• Does the instructor use a recognized method of music instruction?
• Are the lessons designed to meet certain criteria that have been established by a governing body for a standardized assessment or certification by the body or by one of its authorized representatives?
• Does the program involve non-musical elements? If so, what proportion of the schedule is devoted to music instruction? Can the other elements be connected to musical concepts or music instruction methods?
• What is the program's principal goal? More specifically, is the program offered to teach musical skills or for some other purpose, such as recreation?
• How is the program promoted?

If a supplier offers various music programs, some may be considered music lessons for GST and QST purposes and others may not. Each program must be considered separately.

Example

A supplier offers a program for preschool-aged children and their parents. The program is promoted as a great way to spend time together and have fun. The program includes the following activities:

• singing
• musical games
• dancing
• storytelling
• unorganized play

Although the program has certain musical elements, most of the schedule is devoted to other activities. In fact, the program's principal goal is to promote child development and enable children to socialize with other children.

Therefore, the program is not considered a music lesson for GST and QST purposes. Consequently, the supplier's customers must be charged GST and QST.

If you hold a valid Québec taxi driver's permit and offer transportation services by taxi or limousine services, you are carrying on a taxi business and are required to register for the GST/HST and QST.

You can register for the GST/HST and QST by using the Registering for Revenu Québec Files online service, or by completing form LM-1-V, Application for Registration. You must be registered at the time of the first transaction you make, regardless of your total annual taxable sales.

Note that the holder of a taxi driver's permit who receives wages from a taxi business is not required to register.

An information and registration campaign is currently under way so that independent taxi drivers and members of a group may fulfill their fiscal obligations.

For more information, see the brochures Should I Register with Revenu Québec? (IN-202-V) and General Information Concerning the QST and the GST/HST (IN-203-V).