Quebec Sales Tax (QST) rate increase effective January 1, 2012

# 319
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In its March 2010 budget, Quebec announced that an increase to the QST rate collected on goods and services will occur on January 1, 2012. The QST rate will increase from 8.5% to 9.5%.  This announcement is further to Sun Life’s Focus Update #224 "Highlights of the federal and provincial budgets for 2010".

What this means

Services that are currently exempt from both the 5% GST and the 8.5% QST rates will continue to be exempt. Examples of these exempt financial services include:

  • Group insurance premiums
  • ASO with stop loss insurance

Services where the 5% GST as well as the 8.5% QST is currently applicable on our fees will now see the QST rate increase to 9.5%. Examples of these in Group Benefits include:

  • ASO contracts without stop loss insurance
  • Health spending account (when it is the only ASO arrangement)
  • HealthyRETURNS
  • Salary Continuance Services and Absence Analytics and Support

Note: The QST rate of 9% that is currently charged on Group Benefits insurance and ASO contracts is not impacted by the new tax rate increase.

Quebec and Federal Government announce agreement to harmonize the Quebec Sales Tax (QST) with the Goods and Services Tax (GST)

In September 2011, the Quebec and Federal government announced the harmonization of the Quebec Sales Tax (QST) with the GST in the “Memorandum of Agreement concerning a Canada – Quebec Comprehensive Integrated Tax Coordination Agreement”.   The proposed implementation date is January 1, 2013.  

This change will impact how the QST and GST will be calculated on our services where these taxes currently apply on our fees.

In addition, as a result of the QST and GST harmonization, the current Quebec premium tax rate of 2.55% will reduce by .35% on the proposed implementation date of January 1, 2013 with a further tax rate reduction of .20% planned for March 2014.

It is expected that a formal agreement between Canada and Quebec will be entered into by April 1, 2012 at which point additional details of this new tax structure should become available.  We will continue to monitor the development of this new tax structure in order to fully assess the impact these changes will have on our group benefit products and services

For more information about the “Memorandum of Agreement Regarding Sales Tax Harmonization with a View to Concluding a Canada-Quebec Comprehensive Integrated Tax Coordination Agreement” please visit the following website.

Finance Canada Site (English)

Finance Canada Site (French)

Questions?

Please contact your Sun Life Financial group benefits representative.