Harmonized Sales Tax - Place of Supply of Specified Motor Vehicles Delivered and Registered in a Different Province

From: Canada Revenue Agency

GST/HST Info Sheet GI-119
December 2019

This version updates and replaces the one dated July 2011.

This info sheet explains the place of supply rules that determine the province in which the supply of a specified motor vehicle by way of sale is made where the vehicle is delivered and registered in a different province. This is relevant for purposes of determining whether the supply of the vehicle is subject to the GST or the HST.

In this publication, all legislative references to the “Act” are to the Excise Tax Act and all references to the “Regulations” are to the New Harmonized Value-Added Tax System Regulations, unless otherwise specified. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or call GST/HST Rulings at 1-800-959-8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1-800-567-4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1-855-666-5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, see GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Meaning of significant terms

The participating provinces are Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island.

A non‑participating province means a province that is not a participating province or another area in Canada that is outside the participating provinces.

Generally, the recipient of a supply of property or a service means, where consideration for the supply is payable under an agreement for the supply, the person who is liable under the agreement to pay that consideration.

A specified motor vehicle is defined in the Act to mean a vehicle that is, or that would be, if it were imported, classified under one of several tariff items in Schedule I to the Customs Tariff. Generally, this includes all motor vehicles, other than racing cars classified under heading number 87.03 of Schedule I to the Customs Tariff and any prescribed motor vehicles. Currently, there are no prescribed motor vehicles under the Act.

Background

The Act and its Regulations contain place of supply rules that determine the province in which a supply is made depending on the nature of the supply.

Taxable (other than zero‑rated) supplies that are made in a participating province based on the place of supply rules are subject to the HST at the following rates:

  • 15% in New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (consisting of the 5% federal part and a 10% provincial part)
  • 13% in Ontario (consisting of the 5% federal part and an 8% provincial part)

All references to supplies in this publication are to taxable (other than zero‑rated) supplies made by GST/HST registrants in respect of which a supplier is required to collect tax.

General place of supply rule for sales of goods

Under the general place of supply rule that applies to sales of goods, the supply of a specified motor vehicle by way of sale is made in a province if the supplier delivers the vehicle or makes it available in the province to the recipient of the supply. The application of this place of supply rule is generally based on the province in which legal delivery of the vehicle to the recipient occurs. However, for purposes of this rule, a vehicle is also deemed to be delivered in a province if one of the following applies:

  • the supplier ships the vehicle to a destination in the province specified in the contract for carriage of the vehicle
  • the supplier transfers possession of the vehicle to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the vehicle to a destination in the province

The province in which a vehicle is considered to be delivered or made available under this general place of supply rule is referred to in this publication as the province in which delivery of the vehicle occurs.

Self-assessment and rebate of the provincial part of the HST

The HST applies at different rates depending on the province of supply. It does not apply to supplies made outside the participating provinces. To take this into account, the place of supply rules are complemented by self‑assessment and rebate rules.

Self‑assessment of the provincial part of the HST is generally required where goods (including specified motor vehicles) are:

  • brought into a participating province from a non‑participating province
  • brought into a participating province from another participating province for which the rate of the provincial part of the HST is lower

The amount to be self‑assessed is calculated based on the difference in the provincial rates. The provincial part of the HST required to be self‑assessed in respect of a specified motor vehicle is required to be paid to the provincial motor vehicle registration authority of the relevant participating province, which collects the provincial part of the HST on behalf of the Canada Revenue Agency (CRA). The amount is required to be paid on the earlier of:

  • the day the recipient is required to register the vehicle in a participating province under the laws of the participating province relating to the registration of motor vehicles
  • the day the recipient registers the vehicle in the participating province

A recipient of a supply of a specified motor vehicle that is made in a participating province may, in certain circumstances, apply for a rebate of all or part of the provincial part of the HST paid in respect of the supply. Generally, in order to qualify for the rebate the recipient must:

  • acquire the vehicle for use exclusively outside the participating province
  • remove the vehicle from the participating province to another province that either has a lower provincial part of the HST or no HST (GST only) within 30 days after it is delivered to the recipient
  • pay all levies of the other province, if any, that are payable by the recipient in respect of the vehicle

Special place of supply rule for sales of specified motor vehicles delivered and registered in a different province

Where a supplier such as an automobile dealer sells a specified motor vehicle, the vehicle is often registered by the recipient or by the supplier on behalf of the recipient, before or soon after it is delivered to the recipient. In these cases, the vehicle is not always registered in the same province in which delivery of the vehicle to the recipient occurs and in which the vehicle is considered to be supplied under the general place of supply rule.

Where the vehicle is supplied in a participating province and removed from that province for use in a non‑participating province, the recipient can be required to pay both the amount of the provincial part of the HST to the supplier in respect of the supply and the amount of any applicable provincial tax of the province in which the vehicle is registered. The recipient in this case would only be eligible to recover the provincial part of the HST paid to the supplier by applying for a rebate after the transaction has taken place and the amounts have been paid. To eliminate the requirement and related cash flow cost for the purchaser of the vehicle in this case to pay the HST at the rate of the participating province in which delivery occurs and then apply for a rebate of the provincial part of the HST, the supply of the vehicle is generally deemed under a special place of supply rule to be made in the particular province in which the vehicle is registered.

Specifically, the supply by way of sale of a specified motor vehicle is considered to be made in a particular province if both of the following apply:

  • the vehicle is registered (other than on a temporary basis) by or on behalf of the recipient under the laws of the particular province relating to the registration of motor vehicles on or before the day that is 7 days after the day on which the vehicle is delivered or made available to the recipient in a participating province (other than the particular province)
  • the supplier maintains evidence satisfactory to the Minister of that registration

The supplier is required to maintain the following documentary evidence in its records:

  • a dated copy of the permanent registration of the vehicle in the particular province in the recipient’s name
  • a copy of the vehicle purchase agreement or other sales document, such as a bill of sale, that indicates the date of delivery of the vehicle

In order to substantiate to the relevant vehicle registration authority of a particular participating province that self‑assessment of the provincial part of the HST is not required when the vehicle is registered in that province, the recipient is required to make the following available to the vehicle registration authority:

  • a copy of the vehicle purchase agreement or other sales document, such as a bill of sale, showing the date of delivery of the vehicle in another participating province
  • proof that the provincial part of the HST in respect of the particular participating province is payable, or has been paid, in respect of the supply

Collection of tax under the special place of supply rule

Under this place of supply rule, the supplier collects the provincial part of the HST based on the province in which the specified motor vehicle is registered.

As such, in some cases this place of supply rule results in a lower rate of the provincial part of the HST being collected by the supplier than would have been collected based on the general place of supply rule while in other cases this place of supply rule results in a higher rate of the provincial part of the HST being collected by the supplier.

This place of supply rule also affects the recipient’s obligation to self‑assess the provincial part of the HST and their entitlement to a rebate of the provincial part of the HST.

Example 1 

An automobile dealer located in Ontario sells a specified motor vehicle to a recipient who is resident in Quebec. Delivery of the vehicle to the recipient occurs in Ontario at the location of the dealership. Before delivery of the vehicle to the recipient in Ontario, the dealer registers the vehicle in Quebec on behalf of the recipient.

Although delivery of the vehicle to the recipient occurs in Ontario, the supply of the vehicle is deemed under the special place of supply rule to be made in Quebec because the vehicle is registered in Quebec on behalf of the recipient before the date of delivery of the vehicle to the recipient in Ontario. The dealer will therefore collect the GST at a rate of 5% in respect of the supply of the vehicle.


Example 2


An automobile dealer located in Nova Scotia sells a specified motor vehicle to a recipient who is resident in Ontario. Delivery of the vehicle to the recipient occurs in Nova Scotia at the location of the dealership. Before delivery of the vehicle to the recipient in Nova Scotia, the dealer registers the vehicle in Ontario on behalf of the recipient.

The supply of the vehicle is deemed to be made in Ontario because the vehicle is registered in Ontario on behalf of the recipient within 7 days after the date of delivery of the vehicle to the recipient in Nova Scotia. The dealer will therefore collect the HST at a rate of 13% in respect of the supply of the vehicle.

Circumstances in which the special place of supply rule does not apply

The special place of supply rule does not apply in the following situations:

Delivery in a non-participating province

Supplies of vehicles by way of sale that are delivered to the recipient in a non‑participating province continue to be made in a non‑participating province and are relieved of the provincial part of the HST.

Delivery and registration in the same participating province

Supplies of vehicles by way of sale that are delivered and registered in the same participating province are subject to the general place of supply rule.

Registration more than 7 days after delivery

Where the vehicle is registered in a particular province more than 7 days after the date of delivery of the vehicle to the recipient in a participating province, the general place of supply rule applies based on the province in which delivery of the vehicle to the recipient occurs.

If a supplier in this case collects the provincial part of the HST of the province of registration, the supplier is considered to have collected an amount as tax in error and is required to include that amount in its net tax. The amount paid in error (the provincial part of the HST of that province) by the recipient to the supplier does not relieve the recipient of the potential obligation to pay the provincial part of the HST when the vehicle is registered in the particular province. The recipient may recover the overpaid amount in one of the following ways:

  • by seeking a refund or credit of the amount from the supplier (who may then claim a corresponding net tax deduction where a credit note for the amount is issued to the recipient)
  • by applying to the CRA for a rebate of the amount by filing Form GST189, General Application for Rebate of GST/HST

Example 3

An automobile dealer located in Ontario sells a specified motor vehicle to a recipient who is resident in Quebec. The recipient takes delivery of the vehicle in Ontario at the location of the dealership and subsequently drives it to Quebec. The recipient registers the vehicle in Quebec 10 days later.

Delivery of the vehicle to the recipient occurs in Ontario. Although the vehicle is registered in Quebec by the recipient, the special place of supply rule does not apply since the vehicle was not registered within 7 days after the date of delivery of the vehicle to the recipient in Ontario. The supply of the vehicle is therefore made in Ontario and the dealer is required to collect the HST at a rate of 13% in respect of the supply. The recipient would be eligible for a rebate of the 8% provincial part of the HST in Ontario that the recipient paid to the dealer if the recipient has met all of the rebate conditions previously explained.


Example 4


An automobile dealer located in Alberta sells a specified motor vehicle to a recipient who is resident in Prince Edward Island. Delivery of the vehicle to the recipient occurs in Alberta at the location of the dealership. Before delivery of the vehicle to the recipient in Alberta, the recipient registers the vehicle in Prince Edward Island and provides the dealer with a copy of the registration.

Because delivery of the vehicle to the recipient occurs in Alberta, a non‑participating province, the special place of supply rule does not apply. The supply of the vehicle is deemed under the general place of supply rule to be made in Alberta. The dealer is therefore required to collect the GST at a rate of 5% in respect of the supply. The recipient is required to pay the provincial part of the HST at a rate of 10% to the provincial motor vehicle registration authority in Prince Edward Island upon registering the vehicle in that province.


Example 5


An automobile dealer located in Prince Edward Island sells a specified motor vehicle to a recipient who is resident in Prince Edward Island. Delivery of the vehicle to the recipient occurs in Prince Edward Island at the location of the dealership. Before delivery of the vehicle to the recipient in Prince Edward Island, the dealer registers the vehicle in Prince Edward Island on behalf of the recipient.

Because delivery of the vehicle to the recipient occurs in Prince Edward Island, the same participating province in which the vehicle is registered, the special place of supply rule does not apply. The supply of the vehicle is deemed under the general place of supply rule to be made in Prince Edward Island. The dealer is therefore required to collect the HST at a rate of 15% in respect of the supply.


Example 6


An automobile dealer located in Quebec sells a specified motor vehicle to a recipient who is resident in Ontario. The Quebec dealer agrees to ship the vehicle to the recipient in Ontario. Before delivery of the vehicle to the recipient in Ontario, the dealer registers the vehicle in Ontario on behalf of the recipient.

Because delivery of the vehicle to the recipient occurs in Ontario, the same participating province in which the vehicle is registered, the special place of supply rule does not apply. The supply of the vehicle is deemed under the general place of supply rule to be made in Ontario. The dealer is therefore required to collect the HST at a rate of 13% in respect of the supply.


Example 7


An automobile dealer located in Ontario sells a specified motor vehicle to a recipient who is resident in Nova Scotia. The recipient takes delivery of the vehicle in Ontario at the location of the dealership. The dealer collects the HST at a rate of 13% in respect of the supply of the vehicle. After taking delivery of the vehicle at the dealership, the recipient drives the vehicle to Nova Scotia the same day. The following day, the recipient registers the vehicle in Nova Scotia. The dealer does not obtain any evidence of the registration of the vehicle in Nova Scotia.

Although the vehicle is registered in Nova Scotia within 7 days after the date of delivery of the vehicle to the recipient in Ontario, the special place of supply rule does not apply in this case, as the dealer did not maintain any evidence of that registration. As a result, the supply of the vehicle to the recipient occurs in Ontario. Since the supply is made in Ontario, the dealer is required to collect the HST at a rate of 13% in respect of the supply. Upon registering the vehicle in Nova Scotia, the recipient is required to pay the HST to the provincial motor vehicle registration authority in Nova Scotia calculated at a rate of 2%, which is the difference between the rates of the provincial part of the HST in Nova Scotia (10%) and Ontario (8%).

The appendix to this info sheet includes a table that provides an overview of the application of the provincial part of the HST in various circumstances, including those in which the special place of supply rule is applied by the supplier.

Further information

All GST/HST technical publications are available at GST/HST technical information.

To make a GST/HST enquiry by telephone:

  • for GST/HST general enquiries, call Business Enquiries at 1-800-959-5525
  • for GST/HST technical enquiries, call GST/HST Rulings at 1-800-959-8287

If you are located in Quebec, call Revenu Québec at 1-800-567-4692 or visit their website at revenuquebec.ca.

If you are a selected listed financial institution (whether or not you are located in Quebec) and require information on the GST/HST or the QST, go to GST/HST and QST - Financial institutions, including selected listed financial institutions or:

  • for general GST/HST or QST enquiries, call Business Enquiries at 1-800-959-5525
  • for technical GST/HST or QST enquiries, call GST/HST Rulings SLFI at 1-855-666-5166
APPENDIX – Application of provincial part of HST in various circumstances
Province of vehicle delivery Province of vehicle registration Date of vehicle registration Place of supply Provincial part of HST collectible by supplier Footnote 2 Provincial part of HST payable at registration Eligibility for rebate of HSTFootnote 4
ON, NB, NS, PEI, NLFootnote 1 Non‑participating province Within 7 days after delivery date Non‑participating province None None None
ON NB, NS, PEI, NL Within 7 days after delivery date NB, NS, PEI, NL 10% None None
ON, NB, NS, PEI, NL ON Within 7 days after delivery date ONFootnote 3 8% None None
NB, NS, PEI, NL NB, NS, PEI, NL Within 7 days after delivery date NB, NS, PEI, NLFootnote 3 10% None None
ON Non‑participating province More than 7 days after delivery date ON 8% None 8%
NB, NS, PEI, NL Non‑participating province More than 7 days after delivery date NB, NS, PEI, NL, 10% None 10%
ON NB, NS, PEI, NL More than 7 days after delivery date ON 8% 2% None
NB, NS, PEI, NL ON More than 7 days after delivery date NB, NS, PEI, NL 10% None 2%
ON ON More than 7 days after delivery date ON 8% None None
NB, NS, PEI, NL NB, NS, PEI, NL More than 7 days after delivery date NB, NS, PEI, NL 10% None None
Non‑participating province Non‑participating province Any date Non‑participating province None None None
Non‑participating province ON Any date Non‑participating province None 8% None
Non‑participating province NB, NS, PEI, NL Any date Non‑participating province None 10% None
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