At present, Quebec imposes the Quebec sales tax (QST), which is a value added tax that is generally, but not completely, harmonised with the federal goods and services tax (GST).
From January 1 2013, the rules for the QST will become harmonised with rules for the GST.
However, companies will still have to deal with two tax systems in Quebec: the GST and the modified QST.
The most significant change in the QST harmonisation will apply to financial services. Financial services are zero-rated in Quebec, meaning financial service providers can claim input tax refunds to recover the QST they pay on their inputs.
As a result of harmonisation, financial services will become exempt in Quebec, meaning they can no longer claim refunds.
Wendy Brousseau, of McCarthy Tétrault, said this change will result in a significant extra cost...
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