GST/HST information for freight carriers
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The information on this page replaces the information in Guide RC4080, GST/HST Information for Freight Carriers, which has been discontinued.
On this page
GST/HST and freight transportation carriers
Types of freight transportation services
How the GST/HST applies to freight transportation services
GST/HST rate to charge
GST/HST and freight transportation carriers
A freight transportation service provided in Canada may be taxable at the rate for a province, or it may be zero-rated (taxable at 0%). If you are a GST/HST registrant, you have to collect the GST/HST on amounts you charge for the taxable supply of a freight transportation service unless the service is zero-rated.
As a registrant, you can generally claim input tax credits (ITCs) to recover the GST/HST paid or payable on your business-related purchases, such as gas, advertising and commercial rent. You have to keep records of the amounts you pay or owe to support your ITC claims. You may be able to use the simplified method for claiming ITCs. For more information, see Input tax credits.
As a registrant, you will also have file a GST/HST return and calculate your net tax. For more information, go to Complete and file a return – When to file.
To find out if you need to register for a GST/HST account, see Open or manage an account – Register.
Types of freight transportation services
Freight transportation service means a service of transporting goods and includes mail delivery and courier services. It also includes incidental property and services that are part of or incidental to a freight transportation service, such as warehouse, packing, and loading services, where they are supplied by the carrier who supplies the freight transportation service to the recipient of the freight transportation service, whether or not there is a separate charge. A freight transportation service does not include the service provided by the supplier of a passenger transportation service of transporting an individual's baggage as part of the passenger transportation service.
As a result of an amendment to the definition of "freight transportation service", a service of driving an automotive vehicle, which is designed or adapted to be used on highways and streets, for the purpose of delivering the vehicle to a destination will be considered to be a freight transportation service. This amendment is deemed to have come into force on May 18, 2019, but also applies in respect of any supply made on or before that day if the supplier did not, before that day, charge, collect, or remit any amount as or on account of GST/HST in respect of that supply.
Under certain conditions, the services described below may be considered freight transportation services.
Driving services
A driving service may, depending on the circumstances, be considered to be a freight transportation service.
The service of a driver generally will not be considered to be a freight transportation service. For example, a self-employed driver who does not use their own truck and does not assume responsibility for the supply of the freight transportation service will not be considered to be providing a freight transportation service.
Freight forwarder's services
Freight forwarders usually act as agents for their clients. Forwarders generally assist shippers with the preparation and booking of a freight transportation service.
A freight forwarder is not a carrier providing a freight transportation service when the freight forwarder acts as an agent for a shipper and does not assume responsibility for the transportation of the goods.
However, a freight forwarder is providing a freight transportation service if the freight forwarder is a carrier and assumes responsibility for the transportation of goods.
If a freight forwarder acts as an agent for a Canadian shipper by arranging for the transportation of goods, the freight forwarder has to charge the GST/HST on its commission, whether the destination of the goods is domestic or international.
Services provided by a freight forwarder are zero-rated when either:
- the freight forwarder is acting as an agent for a non-resident person who is not registered for the GST/HST when the service is provided
- the service relates to a zero-rated freight transportation service, other than interlining
Pilot car services
A pilot car service is a service of providing a marker vehicle for a carrier when the carrier moves a load that exceeds the legislated dimensions for travel on roads and highways. A pilot car service is part of a freight transportation service when the carrier provides the pilot car service.
If an independent contractor or someone other than the carrier provides the pilot car service, the service is not part of a freight transportation service.
Reload centre services
A reload centre is used as a cross-dock operation when goods are transported to the facility by rail or by truck. The goods are unloaded and, if not immediately reloaded for further transport, are stored for a short period of time (usually 30 days or less). If the goods are not processed or altered in any way while they are in the facility, the services provided at the reload centre are generally freight transportation services.
Repositioning a conveyance
Carriers may charge empty-mile charges for the repositioning of a conveyance. This service is incidental to, or part of, a freight transportation service when the empty mile charge is for a specific freight movement. Documents, such as a driver’s pay stub showing a probill and trip number, have to be kept to show that the charge is incidental to, or part of, a freight transportation service.
Shunting services
A service of transferring trailers from a client's yard to a loading dock (shunting) is generally a freight transportation service.
Stevedoring services
The loading and unloading of ships (stevedoring) is generally a freight transportation service. Generally, a person providing such a service is a carriers.
Towing services
The service of towing a vehicle from the site of an accident or breakdown is a freight transportation service. Roadside services (for example, car boosting, winching, and unlocking doors) are not freight transportation services, since these services do not involve the transportation of goods. If a tow truck operator provides car boosting or other services before towing a vehicle, the car boosting or other services may be incidental to, or part of, the freight transportation service.
How the GST/HST applies to freight transportation services
It is important to know whether a supply of a freight transportation service is subject to the GST/HST and if so, at which rate.
Find out if you need to charge the GST/HST
To know if you need to charge and collect the GST/HST, you need to determine:
The tax status of the services and expenses
Use the following tabs to determine the tax status of a service you provide and your related expenses.
Taxable supplies (other than zero-rated)
Taxable supplies (other than zero-rated)
This means that:
- you charge and collect the GST/HST on the supplies that are made in Canada
- you may be eligible to claim ITCs to recover the GST/HST paid or payable on purchases made to provide those supplies
Most domestic freight transportation services (services that originate and terminate in Canada) are subject to:
- the HST for destinations within the participating provinces
- the GST for destinations in the rest of Canada
If you provide a freight transportation service that takes place partly outside Canada, but both the origin and destination are in Canada, it is considered a domestic service.
Examples of taxable supplies
Taxable supplies include:
- freight transportation services that originate and terminate in Canada (domestic freight services)
- coastal shipping
- shipments between two places in Canada, routed through the United States
- customs brokerage services
- gasoline, propane, diesel and other fuels
- vehicle repairs and maintenance
- commercial rent
- advertising
- most telecommunications services provided in Canada
Zero-rated supplies of goods and services
Zero-rated supplies of goods and services
This means that:
- GST/HST of 0% is charged and you do not collect the GST/HST on these supplies
- you may be eligible to claim ITCs to recover the GST/HST paid or payable on purchases made to provide those supplies
International freight transportation services generally are zero-rated when the services involve:
- transportation of goods from a place in Canada to a place outside Canada, when the freight charge is $5 or more
- transportation of goods from a place outside Canada to a place in Canada
- transportation of goods from a place outside Canada to another place outside Canada, even if the goods pass through Canada
Domestic freight transportation services generally are zero-rated when the services are either:
- part of a continuous inbound freight movement or continuous outbound freight movement
- supplied to another carrier under an interlining agreement and part of a continuous freight movement
For more information, see GST/HST Memorandum 28.2, Freight Transportation Services.
Examples of a zero-rated supplies of goods and services
Zero-rated supplies of goods and services include:
- a continuous inbound freight movement, if certain conditions are met
- a continuous outbound freight movement (international freight service), if certain conditions are met
- interlining (including the services that are part of a continuous freight movement)
- freight forwarders' services if certain conditions are met
Exempt supplies of goods and services
Exempt supplies of goods and services
This means that:
- you do not charge or collect the GST/HST on the supplies
- you cannot claim ITCs to recover the GST/HST paid or payable on expenses related to making those supplies
Examples of a exempt supplies of goods and services
Exempt supplies of goods and services include:
- insurance services provided directly by insurance companies
- licences or permits provided by a government or municipality
- certain domestic ferry services
Shipper's declaration
The shipper's declaration should state that the goods are being shipped for export and the carrier's freight transportation services are part of a continuous outbound freight movement of the goods. The declaration could be on the bill of lading given to the original carrier, or on a separate document given to the carrier.
Example of a shipper's declaration
Declaration by the shipper under paragraph 7(a) of Part VII of Schedule VI to the Excise Tax Act:
The property is being shipped for export and the freight transportation service to be supplied by the carrier is part of a continuous outbound freight movement in respect of the property (within the meaning of subsection 1(1) of Part VII of Schedule VI to the Excise Tax Act).
_____________________________________________________
Name of shipper or authorized representative
_____________________________________________________
Signature of the shipper or authorized representative
If the declarations are not made, the carrier's services are taxable at 5%, 13%, or 15% and the carrier has to collect the GST/HST on the freight transportation services provided in Canada, unless interlining applies (see If the freight transportation service has an interlining agreement).
A carrier's services are also taxable at 5%, 13%, or 15% if a shipper provides a declaration to the carrier but the goods are not exported. In this case, the carrier is not required to collect the GST/HST on its services if the carrier did not know or could not reasonably have known that the goods were being delivered to a destination in Canada. When the shipper provides a false declaration, the shipper has to account for the tax on the carrier's services.
If the freight transportation service has an interlining agreement
Several carriers may take part in the supply of a freight transportation service during the course of a continuous freight movement from a shipper to a consignee, but only one carrier invoices the customer. This process is called interlining.
Only the invoicing carrier who settles the freight bill directly with the customer (either the shipper in the case of a prepaid move, or the consignee in the case of a collect haul), is responsible for charging and collecting any applicable GST/HST.
Supplies of freight transportation services between interlining carriers are zero-rated. This is the case even if the invoicing carrier is acting as an agent for the other carriers for collecting the GST/HST.
When a person whose business includes the supply of freight transportation services is shipping the person's own goods and transfers possession of those goods to a carrier, that person is the shipper of the goods and not a carrier. In this case, the interlining rules do not apply.
Example of an interlining agreement
Carrier A contracts with Carrier B to have it transport a load of pallets owned by Carrier A. Because Carrier A is shipping its own goods, Carrier A is the shipper. Therefore, Carrier B's charge for the freight transportation service does not qualify as interlining. If it is a domestic freight transportation service, Carrier B's service is taxable at the applicable GST/HST rate, and Carrier B must collect the GST/HST.
An owner-operator may provide a freight transportation service for a carrier and the carrier remains responsible for invoicing the customer. In this case, the services provided by the owner-operator are zero-rated because the owner-operator is an interlining carrier and not the invoicing carrier.
Different situations related to the interlining process
Chargebacks
Interlining may also involve transactions, other than freight transportation services, between the first carrier and the next carrier (a chargeback). A chargeback for supplies used in the transportation of freight from one freight carrier to another freight carrier (such as a truck-owner operator), is not a supply of a freight transportation service. A chargeback is usually for property and services (such as fuel, truck repairs, maintenance, or permits) used to provide freight transportation services, but those supplies are not freight transportation services themselves. As a result, the interlining rules do not apply to supplies that give rise to a chargeback, and the chargeback is usually subject to the GST/HST.
Example of a chargeback
ABC is a GST/HST registrant in the business of transporting goods, and it subcontracts freight transportation services to DEF. ABC is considered the invoicing carrier and charges the applicable GST/HST to the shipper. DEF is in the business of transporting goods and is contracted by ABC to move the goods. The owners/operators are the truck drivers who are subcontracted by DEF to physically move the goods.
In this example, ABC is the invoicing carrier and charges the applicable GST/HST for the freight transportation services invoiced to the shipper. The amounts charged to ABC by DEF are zero-rated. The amounts charged to DEF by ABC for fuel and the permits are chargebacks and are not considered zero-rated interline settlements. The applicable GST/HST therefore applies to the fuel and permits.
Courier services
The interlining rules also apply to courier services. For example, when a freight company contracts with a courier to pick up or deliver goods to the freight company, the courier bills the freight company for the service and, in turn, the freight company bills either the shipper or the consignee. The courier does not charge the GST/HST on its service, because it is an interlining carrier and not the invoicing carrier.
When a courier company contracts with a person to deliver goods, the courier company issues an invoice to its customer and is responsible for charging and collecting the GST/HST. Persons who are under contract with the courier company to make deliveries and who do not invoice the customer directly can zero-rate their services to the courier company, because they are interlining carriers.
As a courier providing only interline freight transportation services, you do not collect the GST/HST from the carrier for those services. In this case, even if you are a small supplier, you would benefit from registering for the GST/HST, since you would be able to claim ITC for the GST/HST you pay or owe on expenses related to your interline services.
Gravel pit owners and dump truck operators
It is common for a contractor who has been hired to build a road to own a gravel pit and to supply the gravel needed to build the road from its pit. Given the volume of gravel required to build the road, the contractor will often subcontract with a dump truck operator to transport the gravel to the road construction site.
The interline provisions would not apply in the case described above. In these circumstances, the gravel pit owner (contractor) is the shipper of the goods, not the carrier. For the interline provisions to apply, there must be at least two carriers. In this case, the dump truck operator is the only carrier. As such, the zero-rating provisions do not apply, and the GST/HST applies to the supply of the transportation service.
Tow truck operators
The service of towing a vehicle from the site of an accident or breakdown is a freight transportation service. Roadside services (for example, car boosting, winching, and unlocking doors) generally are not freight transportation services by themselves, since these services do not involve the transportation of goods. However, if a tow truck operator provides car boosting or other services before towing a vehicle, the car boosting or other services may be incidental to, or part of, a freight transportation service.
The interlining rules may therefore apply to the service of towing a vehicle from the site of an accident or breakdown. When self-employed contractors (operators) work for a GST/HST-registered tow truck company, the services provided by the operators to the tow truck company are zero-rated. However, the tow truck company (as the invoicing carrier) is responsible for charging and collecting the GST/HST from the customers.
As a truck owner-operator or tow truck operator who provides only interline freight transportation services, you do not collect GST/HST from the carrier for those services. In this case, even if you are a small supplier, you would benefit from registering for the GST/HST, since you would be able to claim ITC for GST/HST you pay or owe on expenses related to your interline services.
Example of towing and related roadside services
XYZ is a GST/HST registrant in the business of providing towing and related roadside services (for example, car boosting, winching, and unlocking doors). It has a number of self-employed contractors (operators) operating tow trucks for it. These operators are GST/HST registrants. Customers requiring XYZ's services contact XYZ which, in turn, dispatches the operators to the locations. XYZ then invoices the customers for the towing and related roadside services. The operators invoice XYZ for the towing and related roadside services provided to the customers on XYZ’s behalf.
In this example, both XYZ and the operators are involved in transporting goods. The towing services provided by XYZ to its customers and by the operators to XYZ qualify as freight transportation services. In addition, XYZ, as the invoicing carrier, is responsible for charging and collecting the GST/HST from its customers. Therefore, since the operators are providing freight transportation services on behalf of XYZ, and XYZ is responsible for invoicing the customer, the towing services provided by the operators to XYZ are zero-rated.
However, when roadside services (for example, car boosting, winching, or unlocking doors) do not involve the transportation of goods, they do not, by themselves, qualify as freight transportation services. As a result, these services are not zero-rated and are subject to the GST/HST.
If property and services you provide are incidental to, or part of, freight transportation services
Under certain circumstances, a freight transportation service may also include other property or services that are incidental to, or part of, the freight transportation service. Examples of such property and services include:
- storage and warehousing
- loading and unloading
- refrigeration
- packing
Property and services incidental to, or part of, a freight transportation service have the same tax status as the supply of the freight transportation service.
If other freight and miscellaneous charges apply
Demurrage payments and penalties
Insurance charges
Carriers often provide their clients with some protection against losses or damages. They can self-insure their client's property by including a risk premium in their charge or by charging a separate amount to their client for risk protection. In these cases, they are self-insuring against claims for losses or damages. The charge to their client for this protection takes the same tax status as the freight charge for GST/HST purposes, because it is incidental to, or part of, the freight transportation service.
If a carrier acts as an agent for an insurance company to arrange insurance coverage on a client's property, the carrier does not collect the GST/HST on premiums paid to the insurance company.
Fuel surcharge
A fuel surcharge may be added to an invoice for a supply of a freight transportation service to recover some or all of the increased cost of fuel instead of adjusting the price for the freight transportation service.
If the supply of a freight transportation service is taxable, the entire charge for that service, including the fuel surcharge, is subject to the GST/HST at the same rate. If the supply of a freight transportation service is zero-rated, the entire charge for that service, including the fuel surcharge, is zero-rated.
Loss or damage claim settlements
If freight is lost or damaged in transit, the carrier may be required under the terms of the agreement to replace the goods or compensate the customer. A damage claim settlement paid by a carrier to a claimant is generally not subject to the GST/HST.
Loss or damage claim settlements are different from a reduction in freight charges. A reduction in freight charges is an adjustment to the original invoice. For more information, see Guide RC4022, General Information for GST/HST Registrants.
Mileage credits
A rail carrier pays the owners of railway cars a fee when shippers use cars that the rail carrier does not own. This fee is referred to as a mileage credit. When a railway carrier passes this cost on to the shipper, the invoice to the shipper should reflect the GST/HST on both the gross rental charge and on the mileage credit.
Sufferance warehouse charges
The Canada Border Services Agency (CBSA) licenses sufferance warehouses for the inspection and clearance of imported goods by the CBSA before the goods are released.
Sufferance warehouse services (including the handling and storage services a sufferance warehouse operator provides for imported goods) are zero-rated when the purpose of the services is to enable the examination of the goods before release. However, the zero-rating does not apply to office rents and bay rental fees charged to tenants, or fees for preparing entry documents (other than re-manifesting fees incidental to the handling and storage of goods).
GST/HST rate to charge
The rate of tax charged for a freight transportation service provided in Canada generally depends on the destination of the service. Most domestic freight transportation services are subject to the HST for destinations within the participating provinces and to the GST for destinations in the rest of Canada.
However, for goods being transported from place-to-place in Canada, a freight transportation service may, under certain circumstances, be zero-rated if the service is:
- part of a continuous inbound freight movement
- part of a continuous outbound freight movement
- governed by an interlining agreement that is part of a continuous freight movement
The following table explains how to determine which GST/HST rate to use for freight transportation services
| Originates | Destination | Rate to use |
|---|---|---|
| Canada | Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, or Yukon | GST at 5% |
| Canada | New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, or Prince Edward Island | HST at the applicable rate for the province of destination. For the applicable rate, see GST/HST calculator (and rates) |
| Canada | Outside Canada (if the charge for the freight transportation service is $5 or more) | GST/HST at 0% (zero-rated), if conditions for zero-rating are met |
| Outside Canada | Canada | GST/HST at 0% (zero-rated), if conditions for zero-rating are met |
| Outside Canada | Outside Canada (even if the goods pass through Canada) | GST/HST at 0% (zero-rated), if conditions for zero-rating are met |
If you make other supplies of property or services, see GST/HST rates and place-of-supply rules to determine if those supplies are subject to the GST or the HST.
If you are supplying property or services for export, see GST/HST – Import and exports.
Example – Originates in Quebec and final destination in Ontario
A Quebec manufacturer hires a carrier to transport products from its plant in Montréal to a wholesaler in Ontario.
The place of supply of the freight transportation service is Ontario and the HST applies at the applicable rate because the destination of service is in Ontario.
Example – Originates in Yukon and final destination in New Brunswick
A family hires a moving company to pick up their personal effects at their residence in Yukon and to deliver them to a residence in New Brunswick.
The place of supply of the freight transportation service is in New Brunswick and the HST applies at the applicable rate because the destination of the service is in New Brunswick.
Example – Originates in the United States and final destination in Ontario
A manufacturer in British Columbia hires a carrier to transport products from the United States directly to a wholesaler in Ontario.
The place of supply of the freight transportation service is in Ontario because the destination of the service is in Ontario. However, the supply of the service is zero-rated, because it originates outside Canada.
Example – Originates in Ontario and final destination in Quebec
A manufacturer hires a carrier to transport products from its plant in Ottawa, Ontario, to a wholesaler in Québec, Quebec.
The place of supply of the freight transportation service is Quebec and the GST applies because the destination of the service is in Quebec.
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