Sales tax news: Duties and obligations

Certificates from Revenu Québec

For several years now, any business wishing to bid on, or enter into, a public contract valued at $25,000 or more with a Quebec government department or agency, or a public body in the province, had to obtain a certificate of compliance issued by Revenu Québec (“certificate”).

Private construction contracts – March 1, 2016

Effective March 1, 2016, the certificate requirements pertaining to public contracts will also be applied to private construction contracts carried out in Quebec, whose value, before taxes, is $25,000 or more.

The measures do not apply to contracts entered into with individuals or businesses not operating in the construction sector.

The certificate in respect to private construction contracts will be required where the total amount for construction contracts entered into after February 29, 2016 (taking into account the contract on which the contractor is bidding) with the same contractor is $25,000 or more during a particular calendar year.

Obligations for the contractor

The contractor, which holds a valid licence issued by the Régie du bâtiment du Québec, will be required to obtain a certificate and provide it to the client in the period that begins on the date a bid for a particular construction contract is submitted, and ends on the seventh day after the date the construction work begins.

If the contractor is a partnership or a consortium, each of the partnership’s or consortium’s members must obtain a certificate and remit a copy to the client.

These obligations apply to all levels of subcontracting. Moreover, it should be noted that a business can be both a contractor and a client and, as such, is required to meet the obligations associated with its status.

The certificate will be valid from the time of issue until the end of the third month following the month in which it was issued. If a certificate is issued for the first time between February 1, 2016 and January 31, 2017, the certificate will be valid until the end of the third, fourth or fifth month following the month in which it was issued.

Certificates will be valid for contracts entered into during the validity period. After this period, the contractor will be required to obtain a new certificate to be able to enter into new contracts.

Obligations for the client

The client will be required to obtain a copy of the certificate from the contractor in the period that begins on the date a bid for a particular construction contract is submitted and that ends on the seventh day after the date the construction work begins.

The client will be required to ensure the validity and authenticity of the certificate within 10 days after work begins, by confirming the accuracy of the information contained therein: the date and time of issue of the certificate, the contractor’s company name and the Quebec business number on Revenu Québec’s website.

Employment agencies

The certificate requirement also applies to services provided by employment agencies. The rules are similar to those outlined above, with a few differences:

  • The contracts, to which the certificate pertains, do not appear to be limited to contracts carried out in Quebec. All contracts for personnel placement and temporary help services between an employment agency and a client, with each party having a permanent establishment and carrying on a business in Quebec, should be taken into account in establishing the $25,000 threshold;
  • The employment agency will be required to renew its certification and to provide a valid certificate to its client throughout the whole contract period.
In conclusion, given that clients, contractors and employment agencies are liable for significant fines and penalties, we recommend:

  • providing or obtaining a copy of the certificate when submitting a bid;
  • signing up for Revenu Québec’s Clic Revenu online services using the following link: http://www.revenuquebec.ca/en/salle-de-presse/actualites/2015/2015-11-02(1).aspx;
  • withholding the payment of the taxes, when a contractor or an employment agency delays providing the certificate, in order to not jeopardize the eligibility for input tax credits (ITC) or input tax refunds (ITR) and to ensure compliance with the documentation requirements.
Taxable benefits

2016 rates for automobile benefits

  • The limit for the tax-exempt allowance paid to employees who use their personal vehicle for business purposes has been reduced by 1 cent to 54 cents per kilometre for the first 5,000 kilometres driven, and to 48 cents per kilometre for each additional kilometre.
  • The amount used to determine the employee’s taxable benefit relating to the personal portion of automobile operating expenses paid by their employers has been reduced by 1 cent to 26 cents per kilometre.
  • The ceiling for capital cost allowance (CCA) purposes remains at $30,000 (plus taxes), the maximum allowable interest deduction remains $300 per month and the limit on deductible leasing costs remains $800 per month (plus taxes).
GST/HST/QST return for 2015

It is important to remember that registered employers are required to calculate and remit the GST/HST and QST on certain taxable benefits provided to their employees in 2015 in their GST/HST and QST return for the reporting period that includes the last day of February 2016.

Commodity Tax Group
Tax Division


Irena Glavina
Manager
T. 514.934.3429
iglavina@richter.ca

Catherine Dickner
Senior Manager
T. 514.934.3595
cdickner@richter.ca

Christiane Maurice
Manager
T. 514.934.3428
cmaurice@richter.ca

Martin Gilbert
Senior Manager
T. 514.934.3443
mgilbert@richter.ca