GST/HST for trucking companies: a practical guide for Canadian carriers

Do you need to register?

A business that makes taxable supplies in Canada must register for GST/HST unless it is a small supplier. According to the CRA’s general guide for registrants, you are a small supplier while your revenue from taxable supplies (worldwide, including associates) is 30,000 or less (in Canadian dollars) in any single calendar quarter and over the last four consecutive calendar quarters.

Go over in a single quarter and you are a registrant from the supply that took you over, and you must register within 29 days. Go over across four quarters without any single quarter doing it, and you stop being a small supplier at the end of the month after that fourth quarter. Freight revenue can pass this threshold quickly, so check it at the end of every quarter until you register.

Small suppliers may register voluntarily. Most carriers should, because registration is what lets you claim input tax credits on fuel, tires, repairs, equipment and the rest of your costs. A small supplier that is not registered pays GST/HST on every purchase and cannot recover it.

In Quebec, Revenu Québec generally administers the GST/HST as well as the QST, so a Quebec carrier deals with Revenu Québec for both (more below).

Which rate: place of supply for freight

Two Canadian sales taxes share one federal base. Five provinces, Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador, are participating provinces that charge the harmonized sales tax (HST). The rest of Canada charges GST, and some provinces add their own sales tax on top under separate rules.

Which one goes on a freight invoice depends on where the supply is made. The CRA’s place of supply rules say a freight transportation service is made in a province if the destination of the service is in that province. Origin, your head office and the customer’s address do not decide it; the delivery point does.

• A load from Winnipeg delivered to Toronto is made in Ontario: charge HST at Ontario’s rate.
• A load from Toronto delivered to Winnipeg is made in Manitoba, a non-participating province: charge GST.
• A load from Halifax delivered to Moncton is made in New Brunswick: charge HST at New Brunswick’s rate.

HST rates differ between participating provinces and have changed in recent years, so take the rate for each destination from the CRA’s place of supply page rather than from memory.

Zero-rated freight: cross-border and continuous moves

A zero-rated supply is taxable at 0%. You charge no GST/HST on it, but you can still claim input tax credits on the costs of making it. That is different from an exempt supply, where no tax is charged and you generally cannot claim credits. Most freight that crosses the border is zero-rated.

The CRA’s guidance for freight carriers sets out these main cases:

• Outside Canada to Canada: transporting goods from a place outside Canada to a place in Canada is zero-rated.
• Canada to outside Canada: zero-rated when the conditions are met.
• Outside Canada to outside Canada: zero-rated, even if the goods pass through Canada.
• Domestic leg of an inbound move: a leg from one place in Canada to another can be zero-rated when it is part of a continuous freight movement that started outside Canada, provided you keep documentary evidence of that.
• Domestic leg of an outbound move: zero-rated if it is part of a continuous outbound movement and the shipper gives you a declaration that the goods are being shipped for export. The declaration can be on the bill of lading or a separate document. Without it, your leg is taxable at the destination rate.
• Interlining: supplies of freight transportation services between interlining carriers are zero-rated; only the carrier that invoices the customer charges GST/HST. Chargebacks between carriers, such as fuel or permits, are not interlining supplies and are usually taxable.

A continuous freight movement is the transportation of goods by one or more carriers to a destination the shipper specified, where each carrier acts on the shipper’s instructions, as defined in the CRA’s memorandum on freight transportation services. The shipper is the person who hands the goods to a carrier at the origin, not another carrier.

Input tax credits on fuel, repairs and equipment

As a registrant you recover the GST/HST you pay on purchases and expenses to the extent they are used in your commercial activities. For a carrier that is most of its costs: diesel, DEF, tires, parts, shop labour, truck and trailer leases, software and office rent. The CRA’s freight carrier page names fuel as a typical example.

Three rules catch carriers out:

• Documentation. An input tax credit needs a supporting document. Under 100 (in Canadian dollars), the supplier’s name, the date and the total are enough. From 100, you also need the supplier’s GST/HST registration number and the tax amount or a statement that it is included. From 500, add your name, a description and the terms. Check that your fuel card statements show what the CRA requires, including the seller’s registration number for purchases of 100 or more.
• Time limit. Most registrants have until the due date of the return for the last period ending within four years of the period the credit could first be claimed. Certain businesses and listed financial institutions have two years.
• Capital property. Trucks, trailers and shop equipment are capital property, and the CRA has specific rules for how much of the tax on them you can claim. Ask your accountant before you claim the tax on a large equipment purchase.

If your customer is the one claiming credits, your invoice has to meet those same requirements. See how to invoice a trucking load for the fields.

Reporting periods, due dates and filing

The CRA assigns your reporting period from your annual taxable supplies, as set out in its guide for registrants:

• 1,500,000 or less (in Canadian dollars): annual, with monthly or quarterly as options.
• More than 1,500,000 up to 6,000,000: quarterly, with monthly as an option.
• More than 6,000,000: monthly.

Monthly and quarterly filers must file and pay within one month after the end of the period; a March 31 quarter is due April 30. Annual filers generally have three months after their fiscal year-end, with exceptions such as individuals with business income and a December 31 year-end, who file by June 15 and pay by April 30. Annual filers may also need to pay instalments during the year. A due date that falls on a weekend or public holiday moves to the next business day.

You must file a return for every reporting period, including a nil return when you have nothing to report. Almost all registrants must now file electronically, and continuing to file on paper results in a penalty.

On the return, line 101 is total sales and other revenue (under the regular method this includes zero-rated sales), line 103 is GST/HST collected or collectible, line 106 is your input tax credits, and lines 104 and 107 are adjustments, leading to net tax on line 109.

Quebec carriers and the QST

Quebec charges its own Quebec sales tax (QST) alongside the GST, and Revenu Québec generally administers both. According to Revenu Québec, a freight transportation service is subject to QST when both the origin and the destination are in Quebec, unless the service is part of a continuous freight movement to a place outside Quebec or from a place outside Canada. International freight is zero-rated under both the GST and the QST.

A load from elsewhere in Canada into Quebec is deemed supplied outside Quebec for QST purposes. A Quebec resident who acquires that service must calculate and remit the QST itself, unless the service is acquired for use exclusively in its commercial activities.

Interprovincial and international carriers that acquire a road vehicle of 3,000 kilograms or more in Quebec must pay QST on it and are generally entitled to an input tax refund. Under the Interprovincial Sales Tax Arrangement, taxes for the other provinces a carrier serves are shared out according to the kilometres travelled in each province. If you run into Quebec regularly, have an accountant who knows these rules review your setup once.

How TruckerPro Finance handles it

In TruckerPro Finance, the tax is set on each load and carried onto its invoice: GST, HST, PST or QST lines as they apply. When an invoice carries GST/HST, the PDF prints the GST/HST registration number from your settings, and your QST number when it carries QST, so your customer has what it needs for its credits.

On the Plus plan, the GST/HST worksheet is laid out like the return, lines 101 to 107, from the invoices you sent and the bills you entered. PST and QST appear as reference lines beside it, and USD invoices and bills are converted at Bank of Canada rates so cross-border work lands in Canadian dollars.

TruckerPro prepares the worksheet; it does not file anything. You or your accountant review it and file the return with the CRA, or with Revenu Québec in Quebec, the way you do today. Compare the plans to see what each one includes.