A provision never before applied to the law on the harmonized sales tax (HST) creates “a hell of a mess” among recreational vehicle dealers in Quebec, from whom the federal government is demanding US$50 million, which puts their operations in jeopardy .
Ottawa is requesting $683,000 from the Amos Camping Center for the period from 2012 to 2019.
“We have 17 employees and an annual payroll of one million. We don’t have $683,000 in cash. We will have to make layoffs. And we are given three months to repay,” complains Lynda Tremblay, commercial director of the company.
“Plus the impact will be zero. The government will reimburse the Canada Revenue Agency [ARC] who will reimburse us. But when? In three months, six months? In the meantime, we pay lawyers, accountants and consultants. It takes resources for nothing,” adds Mme Tremblay, who also expects another bill for the period from 2020 to 2023.
Lynda Tremblay, sales director of the Amos Camping Center. The company that sells trailers also offers snowmobiles in winter. She must repay $683,000 to the CRA.
Photo provided by LYNDA TREMBLAY
Explanations
Unlike Quebec – and all Western Canadian provinces – Ontario uses the HST which includes the 5% GST and its 8% provincial tax. American RV manufacturers charge GST to Quebec dealers, who, in turn, claim it federally. Then, when the RV is sold in Quebec, the dealer collects the GST and QST from the buyer and remits them to the governments.
But under HST rules, never applied until now, a manufacturer would have to charge buyers (in this case dealers) the 13% HST when the product transits through Ontario. It is this missing 8% that the tax authorities are claiming, knowing that they will have to repay it.
All products
“It’s quite a mess. A Toronto firm has been working on the problem for two years, which is nevertheless so simple to resolve. This is an oversight, section 178.8 of the HST Act should simply be amended. The federal government tells us that we may be right, but that it does not have time to correct the problem,” says Steve Lapierre, general director of the Association of recreational vehicle dealers of Quebec (ACVRQ).
It is also curious that, for the moment, only RV dealers in Quebec are targeted. The law should apply to all provinces and all products.
“We think that the government starts with us because it represents significant amounts. If it ever goes to court and he wins, other goods passing through Ontario will also be affected,” thinks Mr. Lapierre.
Roulottes Lévesque, which has seven dealerships, received a bill for nearly $2 million.
“It looks like an administrative error,” opines André Lévesque, boss of the company. It’s completely ridiculous to pay taxes in Ontario for a product sold in Quebec because it passed customs in Sarnia instead of Lacolle. It seems that we will be able to claim it, but we will create a hole in the cash flow and it is obvious that we will not receive the reimbursement tomorrow morning. Will it take six months? Two years? Banks will not finance a tax debt. They will wonder if the CRA is going to pull a rabbit out of its hat for not paying back. Apart from bogging down the system, is there anything to be gained? The answer is no. It’s causing headaches for everyone and the CRA is stubbornly demanding this amount.”
