The situation is denounced jointly by the Canadian Association of Recreational Vehicle Dealers of Canada (known by the English acronym RVDA) and the Association of Recreational Vehicle Dealers of Quebec (ACVRQ). Both associations are urging the Federal Ministry of Finance to change the tax provisions.
The Canada Revenue Agency (CRA) imposes a feedback of 8% on all RVs, as well as parts and accessories, sold in Quebec between 2012 and 2019. This percentage comes from the difference between the Ontario HST (13%) and the Goods and Services Tax (GST) of 5%.
According to the explanations of Steve Lapierre, general director of the ACVRQ, Ontario chose, in 2010, the harmonized taxation system with the federal government. And RVs sold in Quebec transit through Ontario before arriving at their destination.
“The vast majority of RVs are all built in Indiana. When a Quebec trader orders RVs from Indiana, inevitably, they go north, cross into Ontario and drive on the 401 before arriving in Quebec,” he explains.
Until now, only GST was charged by manufacturers to traders. “It was paid for, without problem,” continues Mr. Lapierre.
“And the CRA decided that the Ontario HST should be charged. So, it is not based on where the good goes, but where it crosses into Canada,” he adds.
“The CRA has asked RV manufacturers to reimburse the difference between the HST and the GST. And it went back to 2012.”
— Steve Lapierre, general director of the ACVRQ
Consequently, manufacturers sent invoices to merchants. Mr. Lapierre does not know if other bills will come for the period between 2019 and 2024.
Hefty bills
These are extremely high bills, according to Mr. Lapierre. “All this for a tax formality. Because the merchant could reimburse this tax difference and claim it for no gain for the federal government,” he adds during a telephone interview.
These bills amount to up to $3.8 million for a merchant. Mr. Lapierre claims that more than 50 million US dollars are claimed in this way.
The Roulottes Chaudière dealership in Lévis was handed a bill of more than $900,000 to pay.
“This decision could destroy our businesses,” declared the owner of Roulottes Chaudière, Josée Bédard, in the press release sent by the ACVRQ and RVDA.
“If this problem is not resolved, we will have no choice but to reduce our activities, putting dozens of well-paying jobs at risk,” she adds.
Change requested
What the ACVRQ and RVDA are asking is that Quebec elected officials, at the federal and provincial levels, intervene to demand that Ottawa resolve the problem. Since October 2023, the two entities have been calling for a retroactive amendment to section 178.8 of the Excise Tax Act. Which would solve the problem, according to them.
“This situation truly borders on the absurd: a Quebec company imports an American product intended for Quebec, with the intention of selling it in Quebec, and is forced to pay Ontario sales tax simply because the product is transiting by this province.”
— Éléonore Hamm, president of RVDA
“Yet purchasing the same product from a Western Canadian supplier does not result in any Ontario HST being imposed. The tax law treats American and Canadian suppliers differently,” says Ms. Hamm.
Mr. Lapierre explains that the situation puts traders in a delicate position. “They want to keep a good relationship with the manufacturers. […] A good number of these traders cannot afford such amounts,” he explains.
In his eyes, there is a solution, but it is ultimately risky. “The trader borrows the money and pays the ARC hoping it can be repaid. One of our members did it. He paid the ARC and claimed his reimbursement. It took several months to receive his return. And since it was not a normal transaction, it earned him an audit from the CRA,” he concludes.
