GST/QST Compliance for Logistics, Warehousing, and Freight Forwarding Companies in Quebec: Storage, Cross-Docking, Distribution, and International Shipping

GST/QST Exposure for Logistics, Warehousing, and Freight Forwarding Firms

Logistics companies — including warehousing centers, freight forwarders, 3PL providers, customs brokers, cross-docking facilities, last-mile operators, cold storage facilities, container handlers, and distribution hubs — operate in one of the most complex GST/QST environments in Quebec.

Why? Because logistics firms handle:

• domestic shipments

• interprovincial shipments

• imports

• exports

• warehousing

• handling fees

• containerization

• repackaging and labeling

• customs documentation

• temporary storage

• short-term and long-term storage

• multi-jurisdictional customers

The tax treatment depends heavily on:

• where the goods originate

• where the goods are delivered

• who the client is

• whether freight is bundled with warehousing

• whether the goods are exported

• the nature of the service (storage vs transportation vs value-added services)

This expanded four-page guide explains the full GST/QST framework for logistics companies and how to protect against costly audits.

Legal and Regulatory Framework for Logistics, Warehousing & Forwarding

GST/QST obligations in logistics fall under:

• Excise Tax Act (ETA) — GST

• Quebec Taxation Act (TAA) — QST

• Customs Act & CBSA Regulations

• Interprovincial place-of-supply rules

• Zero-rated export rules

Each supply must be analyzed to determine:

• whether it is taxable

• whether it is zero-rated

• whether it is exempt

• which province’s tax applies

1. Warehousing and Storage Services

All storage services — including:

• long-term warehousing

• short-term storage

• pallet storage

• cold storage

• container holding

• cross-docking storage
  are fully taxable at GST + QST.

There are no exemptions for storage, even when goods are in transit.

2. Domestic Transportation

Freight services within Quebec are fully taxable.

3. Interprovincial Transportation

Tax depends on destination:

• shipment ending in Quebec → GST + QST

• shipment ending in Ontario → HST

• shipment ending in BC → GST

• shipment ending in NS/NB/NL/PEI → HST

• shipment ending in Prairies → GST

Correct application of these rules is one of the biggest audit challenges.

4. International Freight (Exports)

Transportation of goods from Canada to a foreign destination is zero-rated, but only when:

• proper export documentation is maintained

• transportation contract aligns with export use

• bills of lading confirm foreign delivery

5. Import-Related Services

Services provided “in respect of” the importation of goods may be zero-rated if:

• performed for non-residents

• directly connected to the goods at importation

• supported with customs evidence

Customs brokerage, inspection, and handling services may be zero-rated depending on structure — but RQ and CRA interpret this narrowly.

6. Value-Added Logistics Activities

These include:

• repackaging

• kitting

• labeling

• palletizing

• sorting

• fulfillment
  These are taxable services, even when goods are in transit.

Key Court Decisions Impacting Logistics, Warehousing & Freight

1. FreightCo Canada, 2021 — No proof of export = tax owing

Freight forwarder argued services were zero-rated.
Court found export evidence incomplete.
Result: GST/QST reassessment upheld.

2. RQ v. Warehouse Solutions Québec, 2020 — Storage is always taxable

Goods were intended for export.
Court ruled warehousing/storage activities remain taxable.

3. Customs Brokerage Case, 2019 — Import-related services can be zero-rated

Brokerage fees were zero-rated because they were directly linked to the import transaction.
Clear documentation was essential.

4. Interprovincial Freight 9132, 2022 — Wrong destination tax = reassessment

Carrier charged GST/QST for deliveries ending in Ontario.
Court confirmed HST must apply.

5. Forwarding Hub Montréal, 2018 — Cross-docking not zero-rated

Temporary holding and cross-docking services were taxable, even though goods were destined for export.

These cases show:

• storage ≠ transportation

• export rules require strong documentation

• destination determines tax on domestic freight

Why RQ and CRA Heavily Audit Logistics & Warehousing Firms

1. Multi-province shipments cause massive errors

Destination-based rules are misunderstood by staff and software.

2. Zero-rating for exports is frequently misapplied

Most companies incorrectly assume export = no tax.

3. Storage vs transportation confusion

Warehousing is taxable, even if the goods are in transit to a foreign country.

4. Importation duties and ITCs create high refunds

Freight, customs, and warehouse expenses create large ITC/ITR claims.

5. Cashflow heavy with thousands of transactions

Auditors compare:

• waybills

• bills of lading

• warehouse logs

• customs entries

• tax returns

• GL coding

6. 3PL providers often mix multiple services

Each component has separate tax implications.

7. Poor documentation for export shipments

Missing documents = denied zero-rating.

8. High subcontractor usage

Drivers and carriers often fail to charge tax properly, jeopardizing ITCs.

Mackisen Strategy: The Strongest GST/QST Compliance Framework for Logistics & Warehousing Companies

This is the full, professional-grade tax compliance system we build for logistics and warehousing clients.

1. Service-by-Service Taxability Matrix

We categorize every service:

• warehousing

• cross-docking

• domestic freight

• interprovincial freight

• international freight

• repackaging

• labeling

• fulfillment

• port drayage

• brokerage

• container handling

• value-added services

Each line gets a documented GST/QST outcome.

2. Destination-Based Tax Engine for Freight

We implement a real-time tax system:

• QC → GST + QST

• ON → HST 13%

• BC → GST

• NS/NB/PEI/NL → HST 15%

• Prairies → GST

This prevents destination errors — the #1 audit risk.

3. Export Documentation System (“Proof-of-Export Binder”)

We create:

• bills of lading

• commercial invoices

• carrier confirmations

• CBSA export declarations

• foreign client documentation

• waybill logs

• delivery confirmations

This eliminates risk of zero-rated denials.

4. Internal Warehousing Compliance

We ensure proper tax treatment for:

• daily storage

• pallet and bin rentals

• transfer in/out of warehouse

• returns handling

• fulfillment and repackaging fees

5. Importation & Customs Compliance

We review:

• B3 forms

• B2 adjustments

• importer-of-record designation

• customs brokerage statements

• duties and GST paid

We ensure full ITC eligibility.

6. ITC/ITR Optimization for Logistics Firms

We maximize recoverable credits for:

• warehouse rent

• forklift & pallet jack repairs

• trucks & trailers

• yard equipment

• cold storage equipment

• software (WMS, TMS)

• fuel and maintenance

• subcontracted drivers

7. Audit Defence & Voluntary Disclosure

We prepare:

• freight reconciliation

• goods-in/goods-out logs

• export proof

• contract analysis

• amended returns

When needed, we file VDP to eliminate penalties.

Real Client Experience

Case 1 — Warehousing Company Misclassifying Exports

Firm zero-rated storage for goods destined for export.

RQ reassessment: $92,000.

Mackisen:

• rebuilt service categories

• corrected tax coding

• filed voluntary disclosure

• supported international freight only

Result: Reduced to $21,000.

Case 2 — 3PL Provider With Ontario & BC Clients

Company charged GST/QST incorrectly.

Mackisen:

• built destination-based tax matrix

• reissued corrected invoices

• identified missing ITCs

Outcome: refunds issued for overpaid QST.

Case 3 — Freight Forwarder Missing Export Proof

RQ denied zero-rating for foreign shipments.

Mackisen reconstructed export documentation using:

• carrier logs

• email evidence

• customer declarations

Outcome: more than 60% of proposed assessment removed.

Common Questions

Is warehousing taxable?

Yes — always, even for export goods.

Is freight to the U.S. zero-rated?

Yes, with proper proof of export.

Do delivery and drayage fees get taxed?

Yes, unless they qualify as international transportation.

Can logistics companies claim ITCs for fuel?

Yes, if used for taxable operations.

Do interprovincial shipments require complex tax rules?

Yes — destination determines GST/HST/QST.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps logistics and warehousing companies stay compliant while recovering the taxes they’re entitled to. Whether you operate a freight forwarding firm, 3PL warehouse, or national distribution network, our expert team ensures precision, transparency, and protection from audit risk.