By William Crooks
Local Journalism Initiative
A long-standing tax issue is raising concerns among Quebec’s recreational vehicle (RV) dealers and U.S. manufacturers, with some claiming it threatens businesses, jobs, and trade relationships. The Canada Revenue Agency’s (CRA) interpretation of the Excise Tax Act has led to retroactive tax bills amounting to millions of dollars, as RVs shipped to Quebec through Ontario are being subjected to Ontario’s harmonized sales tax (HST). Local businesses, including those in Sherbrooke, argue that the tax demands are unnecessary and place an undue financial burden on them, though this perspective has yet to result in a policy change.
Background of the issue
Daniel Brock, a lawyer with Fasken Martineau DuMoulin LLP who represents affected U.S. manufacturers, provided documents to The Record explaining the issue arises from Section 178.8 of the Excise Tax Act, which determines where sales tax is applied based on where goods are “released” into Canada. For RVs imported into Quebec from the United States, the point of entry is often Windsor, Ontario, before the vehicles are delivered to dealerships across Quebec. Since Ontario’s tax system harmonized in 2010, the CRA has been applying Ontario’s 13 per cent HST rather than the 5 per cent federal GST applicable in Quebec.
Brock explained in a recent interview that the CRA’s interpretation has caused confusion and unexpected financial demands. “For decades, this system worked without issue. Now, because these goods cross the border in Ontario, CRA is claiming Ontario tax applies, even though the vehicles are destined for Quebec.” Brock’s clients include U.S.-based RV manufacturers, who have been hit with significant retroactive tax bills. According to documents provided by Brock and the Canadian RV Coalition, the total retroactive assessments range between $48 and $52 million CAD, with no clear financial benefit for the Canadian government since the tax would ultimately be refunded as input tax credits.
