GST Filing for Freight Transportation Carriers

Freight Transportation Carriers

Freight Transportation Carriers

You may be wondering, what are freight transportation carriers? This refers to services that transport goods including mail delivery and courier services. Additionally, it includes the services that are “incidental” to a freight transportation service like warehouse, packing and loading services that are provided by the carrier. This carrier supplies the freight service to the recipient. When it comes to passenger transportation, the incidental service does not include the transportation of individual’s baggage even if it is part of the passenger transportation service.

Types of Freight Transportation Carriers:

  • Driving Services
    • This includes driver services where the driver uses their own vehicle and assumes responsibility for the supply of the freight transportation service.
  • Freight Forwarder’s Services
    • These are freight forwarders that not only act as agents for their clients by assisting shippers with the preparation and booking of freight transportation services, but also assumes responsibility for the transportation of goods.
  • Pilot Car Services
    • This refers to the service of providing marker vehicles for carriers when the load is oversized for travel on roads and highways but must be provided by the carrier themselves.
  • Reload Centre Services
    • When transporting goods to a facility by rail or truck that need to be unloaded and reloaded within 30 days, it is considered a freight transportation service. The goods cannot be altered while being held until it is reloaded to be considered in this category.
  • Repositioning a Conveyance
    • If the conveyance is repositioned for the facilitation of a freight transportation service and an empty-mile charge is applied, then this is considered a freight transportation service.
  • Shunting Services
    • Transferring trailers from a yard to a loading dock is usually a freight transportation service.
  • Stevedoring Services
    • Loading and unloading ships is a freight transportation service in general as it is provided by a carrier service.
  • Towing Services
    • Towing vehicles from accidents or breakdowns are freight transportation services but this does not include roadside services unless it is part of the service to tow a vehicle.

Tax Obligations for Freight Transportation Services

Taxable Supplies That are Not Zero-Rated

GST/HST is charged and collected on supplies made in Canada but carriers are eligible to claim ITCs and recover the GST/HST paid on purchases made to provide the supplies.

Zero-Rated Supplies of Goods & Services

This is when GST/HST is charged at 0% and no GST/HST is collected but ITCs can be claimed to recover the GST/HST paid on purchases made for this supply.

Exempt Supplies of Goods & Services

Exempt supplies are when GST/HST is not charged or collected on the supplies. Additionally, ITCs can’t be claimed for the GST/HST paid on these expenses.

Zero-Rated Freight Transportation Services

Keep in mind that the following criteria applies for zero-rated transportation services:

  • International freight transportation services are zero-rated when:
    • The goods come from a place in Canada to a place outside Canada and have a freight charge of $5 or more.
    • If the goods are from a place outside Canada to a place in Canada.
    • When the goods come from a place outside Canada to another place outside Canada, even if the goods go through Canada.
  • Freight transportation services that take place partly outside Canada but have an origin and destination within Canada are considered domestic services and so it is not zero-rated.
  • If the goods are part of a continuous inbound or outbound freight movement, then it will be zero-rated even if the service is domestic.
  • Goods that are supplied to another carrier which are under an interlining agreement and also part of a continuous freight movement are zero-rated.

Interlining Agreements

An interlining agreement occurs when multiple carriers are part of the supply of a freight transportation service during a continuous freight movement from the shipper to the consignee. Only one carrier invoices the customer and so they are responsible for charging and collecting any applicable GST/HST. The services between the carriers in the freight movement are zero-rated even if the invoicing carrier is an agent for other carriers.

Freight Transportation Carriers

Other Services or Property Provided for Freight Transportation Services

If the freight transportation service incldues other services or property that are necessary for the transportation of goods, they may be considered part of the freight transportation service. The tax status of the freight transportation service that is supported is the same for these services or property. This includes the following:

  • Storage and Warehousing
  • Loading and Unloading
  • Refrigeration
  • Packing

To find out more information, access the CRA website’s section on GST/HST Information for Freight Carriers by clicking here.