How to Recover QST Paid on Company Vehicles and Fuel

Introduction
For Quebec businesses, the Quebec Sales Tax (QST) paid on company vehicles and fuel can represent a significant amount each year. Fortunately, Revenu Québec allows eligible businesses to recover QST through Input Tax Refunds (ITRs) but only when specific documentation and use conditions are met.

Vehicle and fuel expenses often create confusion because of mixed personal and business use, leasing versus purchasing, and complex QST recovery rules for commercial vehicles. At Mackisen CPA Montreal, our accountants and tax lawyers help businesses navigate these nuances so that every dollar of refundable tax is recovered properly. This guide explains how to claim QST on vehicles and fuel, what restrictions apply, and how to keep your claims fully audit-proof.

Legal and Regulatory Framework
QST recovery on vehicles and fuel is governed by:

• Taxation Act (Quebec) s.250–s.259 — defines Input Tax Refund (ITR) eligibility for commercial property and expenses.

• Tax Administration Act (Quebec) s.34 — requires documentary proof for all ITR claims.

• Taxation Act Regulations (107R2 and 107R3) — outline the limits on ITR claims for road vehicles, fuel, and mixed business/personal use.

• Revenu Québec Interpretation Bulletin TVQ.206.1 — details the treatment of passenger vehicles, leases, and operating expenses.

These laws distinguish between “commercial vehicles” (eligible for full QST recovery) and “passenger vehicles” (subject to restrictions).

Step-by-Step: How to Recover QST Paid on Company Vehicles and Fuel

1. Determine the Type of Vehicle

   • Commercial vehicles (delivery trucks, vans, service vehicles) used exclusively for business are fully eligible for QST refunds.

   • Passenger vehicles (cars, SUVs) used by employees, owners, or executives may be partially restricted for QST recovery if used for personal travel.

   • Vehicles used more than 90% for business can qualify for full recovery under Revenu Québec’s rules.

2. Confirm Vehicle Ownership or Lease Structure

   • Purchased vehicles: Claim QST on the purchase price at the time of acquisition, subject to business-use proportion.

   • Leased vehicles: Claim QST on monthly lease payments, again based on business-use percentage.

   • Maintain a business use logbook showing trip dates, mileage, and purposes for at least one full year.

3. Track and Claim QST on Fuel Purchases

   • QST on fuel is recoverable only when the fuel is used for commercial purposes.

   • Keep receipts showing the supplier’s QST number, amount of QST paid, and date of purchase.

   • If fuel is used in a vehicle with mixed business and personal use, claim QST only on the business-use proportion.

4. Calculate Your Input Tax Refund (ITR)

   • ITR = (Total QST Paid × Business-Use Percentage).

   • Example: A company car used 80% for business with $3,000 QST paid on fuel and maintenance → ITR = $3,000 × 80% = $2,400 refundable.

5. Record the Claim in Your QST Return

   • Report the ITR under line 208 on your FPZ-500-V QST return.

   • Include all supporting invoices and proof of payment in your accounting file.

6. Retain All Supporting Documents

   • Invoices for vehicle purchase or lease.

   • Gas and maintenance receipts.

   • Vehicle logbook.

   • Accounting reports linking QST paid and refunded.

Jurisprudence and Legal Insight
The courts have repeatedly confirmed that proper documentation and accurate business-use allocation are essential for QST recovery:

• Canderel Ltd. v. Canada (SCC 1998) — affirmed that filings must reflect true commercial reality; assumptions without proof are not acceptable.

• Hickman Motors Ltd. v. Canada (SCC 1997) — established that tax authorities’ assessments are presumed correct until the taxpayer provides clear evidence.

• Lac d’Amiante du Québec Ltée (SCC 2001) — validated Revenu Québec’s authority to inspect and request full records for ITR verification.

These cases emphasize one principle: documentation is your only defense.

Documentation: Building an Audit-Ready File
For every QST claim related to vehicles and fuel, maintain a clear and traceable record including:

• Purchase or lease contracts with QST amounts.

• Receipts for fuel, repairs, and maintenance with supplier QST numbers.

• Vehicle registration showing business ownership.

• Mileage logbooks showing total vs. business kilometers.

• Accounting ledger entries linking each expense to the ITR claimed.

• Proof of payment (credit card or bank statement).

At Mackisen CPA Montreal, we create an ITR Compliance Binder for each client, ensuring every QST claim stands up to Revenu Québec verification.

How Revenu Québec Audits Vehicle and Fuel QST Claims
Revenu Québec uses analytics and cross-checking to identify unusual claims:

• They compare your claimed ITRs to industry norms for fuel and vehicle costs.

• They verify logbooks, invoices, and supplier tax numbers.

• For leased vehicles, they review lease contracts and payments for consistency.

• Personal-use vehicles without proper mileage logs are often adjusted or denied.

Failure to maintain accurate mileage logs is the most common reason for denied claims.

Winning With Revenu Québec
At Mackisen CPA Montreal, we ensure every client maximizes QST recovery safely and legally:

1. Eligibility Review – We determine which vehicles qualify for full or partial refunds.

2. Documentation Setup – We establish proper logbooks and digital recordkeeping.

3. ITR Calculation and Filing – We calculate and file exact business-use claims with supporting schedules.

4. Audit Defense – Our CPA auditors and tax lawyers represent you directly before Revenu Québec.

5. Penalty Relief – For past claim errors, we file voluntary corrections and relief applications under Tax Administration Act s.94.1.

Mackisen Service Hub: Vehicle and Fuel Tax Optimization
The Mackisen Service Hub provides end-to-end management for businesses with vehicles and fuel expenses, offering:

• QST recovery and audit-ready ITR tracking.

• Setup of mileage tracking systems and fuel expense automation.

• Full coordination with CRA and Revenu Québec filings.

• Audit representation and compliance monitoring.

Our bilingual team CPA auditors, tax lawyers, and accounting professionals trained at McGill, Université de Montréal, and Concordia University, delivers expertise that ensures every legitimate refund is claimed.

Real Client Example
A Quebec construction company with 12 vehicles was only recovering QST on fuel invoices. Mackisen CPA implemented automated mileage tracking, identified business-use proportions, and corrected prior returns for three years. The firm recovered $68,000 in additional QST refunds, all accepted by Revenu Québec after a routine verification.

Why Mackisen
With over 35 years of combined CPA and legal experience, Mackisen CPA Montreal ensures that your QST recovery on vehicles and fuel is complete, compliant, and fully documented. We help businesses convert overlooked taxes into real cash flow safely, legally, and professionally.

When you work with Mackisen, every kilometre you drive and every litre you purchase becomes part of a smarter tax strategy that keeps your business efficient and financially strong.