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Legislative context
The Québec government enacted Bill 99 on October 28, 2025 (Chapter 27), confirming an increase in the QST rate applicable to insurance premiums.
Key change
Effective January 1, 2027, the QST rate on all taxable insurance premiums will increase from 9% to 9.975%, aligning it with the general QST rate applied to most goods and services in Québec.
The new QST rate will apply to any taxable insurance premiums paid after December 31, 2026.
This measure was initially proposed in the Québec budget tabled on March 25, 2025.
Impact on policyholders
The increase in the QST rate on insurance premiums will primarily affect policyholders across Québec. Individuals and businesses holding taxable insurance policies, such as home, auto and group insurance, will face higher overall insurance costs.
Impact on the insurance industry
This rate increase will have significant implications for the insurance industry. Insurance providers, including insurance companies, brokers and agents, will need to adjust their pricing, systems and client communications to reflect the new QST rate. Specifically, this will involve updating billing systems, revising policy documents and implementing enhanced communication strategies to inform clients and address their concerns.
QST on insurance premiums: Beware of ITR rules
Although the new rate of 9.975% is aligned with the general QST rate, there is a critical distinction: QST paid on insurance premiums is not recoverable through input tax refunds (ITRs), unlike the QST paid on most goods and services.
Given the similarity of the rates, it may become more challenging for businesses to distinguish, within their systems, between non-recoverable QST on insurance premiums and recoverable QST on most goods and services. This will increase the risk of mistakenly claiming an ITR for QST paid on insurance premiums.
Businesses will therefore need to ensure that their accounting systems are properly configured to prevent incorrect ITR claims.
Key takeaways
- New QST rate: 9,975% on insurance premiums.
- Effective date: Applies to premiums paid after December 31, 2026.
- Affected premiums: All taxable premiums in Québec including home, auto and group insurance.
- Industry adjustments required: Billing systems, policy documentation and client communications.
- ITRs Eligibilty: QST on insurance premiums is not eligible for ITRs.
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