Aug 16th, 2023
May 11th, 2020
By Louis-Frédérick Côté
Before accepting an agreement between a landlord and a tenant, whether as landlord or tenant, it is preferable to consider the GST/HST-QST implications of such an agreement.
Essentially, both the GST/HST and the QST systems are accrual accounting systems. This means that the supplier must remit the GST/HST and QST collected or "collectible" to Revenu Québec.
If a tenant has to pay an amount of $10,000, plus GST/HST and QST, on June 1, 2020 and the tenant does not pay, the landlord must still remit to Revenu Québec this GST/HST and QST that is "COLLECTIBLE".
If the agreement between the landlord and the tenant is that this amount will be paid over a period of 10 months ($1,000, plus GST/HST and QST, each month), the landlord will have to finance this GST/HST and QST.
On the other hand, if the agreement is that the June rent is 0 but the November and December rents will be increased by $5,000, plus GST/HST and QST, the GST/HST and QST will become payable in November and December and the landlord will not finance the GST/HST and QST.
If the agreement is that the June rent is 0 but the lease is extended by one month, the GST/HST and QST will be payable at the end of the lease and the landlord will not fund the GST/HST and QST.
On the other hand, if the agreement is that the tenant pays an amount of $50,000 to leave the premises and terminate the lease (rent of $10,000 per month plus GST/HST and QST), the said $50,000, considering section 182 of the GST/HST and section 318 of the QST, includes the GST/HST and the QST. In this regard, see my blog on the website of Spiegel Sohmer Inc. dated April 2, 2020.