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Canadians - How do you explain why you can't collect gst

by WilsonA
16 replies
This is for clickbank and other non canadian affiliate program sales. You know when you make more than $30,000 in a year you are required to collect gst, so for those of you who use clickbank how do you explain why you can't collect gst on the sales you make without revenue canada thinking you are just self employed when you actually own the business.
I already have an idea of what to say but I just like to hear from other canadian warriors
who have either been in this situation or know how to explain this. Thanks
#canadians #collect #explain #gst
  • Profile picture of the author Chris Thompson
    Wilson - the beauty is that CLICKBANK is the vendor, not you. You have absolutely no obligation to collect anything from a tax perspective.
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  • Profile picture of the author Clark
    This is a grey area and I suspect that most will not divulge what they do or bother to encourage you to follow a certain direction in regards to declaring affiliate income with RevCan.

    You'll need to speak with your accountant about that... or not
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  • Profile picture of the author chris_surfrider
    Yep, talk to a CPA.

    And research what "zero rated" and "place of supply" means as an affiliate from a tax perspective.

    -Chris
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    • Profile picture of the author sylviad
      The way I understand the GST... You only have to collect it if the product is being sold in Canada. You are selling products through a U.S. firm. Therefore, you have no issues with GST, regardless of how much you make.

      I remember reading about the GST when I was doing offline business and it seems to me that there were different rules across Canada - for instance, if you sold a Canadian product in another province from your own, the rule changes. Now, I could be wrong on this one. It's been awhile since I did that stuff.

      But I definitely recall that GST only applies to Canadian sales.

      Plus, as Chris points out, you aren't the vendor. Clickbank (and the product owner) is.
      Sylvia
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  • Profile picture of the author Noah Fleming
    I'd talk to an accountant because I've been through all of this and you want the correct answers sooner rather than later :-)
    It's still very much a Grey area right now but that may change.

    As far as some of the advice above, some is a little misleading. When you make that 30k, you can afford to invest $300-500 bucks in your business to sit down with a good accountant for an hour, do it. That hour could save you a lot more than $300 bucks.
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    • Profile picture of the author sylviad
      Originally Posted by Noah Fleming View Post

      I'd talk to an accountant because I've been through all of this and you want the correct answers sooner rather than later :-)
      It's still very much a Grey area right now but that may change.

      As far as some of the advice above, some is a little misleading. When you make that 30k, you can afford to invest $300-500 bucks in your business to sit down with a good accountant for an hour, do it. That hour could save you a lot more than $300 bucks.
      OR...

      You could just go here and read it for yourself...

      GST/HST - General information

      I'm sure you'll find what you need to know right there.

      THEN pay the accountant.

      Sylvia
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      • Profile picture of the author Noah Fleming
        Originally Posted by sylviad View Post

        OR...

        You could just go here and read it for yourself...

        GST/HST - General information

        I'm sure you'll find what you need to know right there.

        THEN pay the accountant.

        Sylvia
        No because actually it isn't that clear cut. Rev Canada has a way of providing just enough info to make it very confusing. Regardless, the confusion lies right now in what is considered a zero-rated service according to what I've been through the past few years. If you're an IM Consultant than you may be providing a Zero-rated service to a non resident but Rev Canada doesn't explain it all that clearly. Or perhaps your IM teachings can be considered "Educational"

        At one point some CDN Accounting firms were saying consulting done over the phone or internet wasn't zero rated. Nowhere does Rev Canada break this down for us specifically.

        certain advisory, professional, or consulting services;
        This all being said I do not charge GST to any US Customers nor do I absorb or remit the GST for them because my accountant and I have come to the decision there is no need to at this point. What I provide is a zero-rated service.

        The advice to see an accountant isn't something that should be an afterthought and I say this from experience. The cost to meet with an accountant and prepare for proper tax planning can mean thousands of dollars when all is said and done. I'd prefer to do things right before I get a bill from Rev Canada.

        After the 30k mark regardless of where the sales come from you MUST register for GST and report all INCOME, so even if your income was say
        100K from the US
        $2700 from Canada

        You must submit the total amount even if you're only submitting gst for the $2700 bucks.
        It does look odd however when you report and then only remit like $62 dollars in GST and you claim half of it back in credits!
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        • Profile picture of the author sylviad
          Thanks, Noah.

          I really hadn't looked very closely at that site when I posted the link, but since then I have. And you are absolutely correct. They are sparse in sharing facts, that's for sure. It really doesn't spell anything out that can help you to make any sensible conclusions re your own situation.

          Clearly, you have far more experience in this than I do. I did go through the cross-border stuff back about 20 years ago, went right into RevCan and talked to an agent re buying and selling US products here. That's when I was informed about the goods not being made / sold here and being exempt. But I must admit, it's a bit blurry now.

          Plus, much has changed since, namely, internet affiliate opportunities.

          As you say, things can change - and they surely will. The government is sure to catch up to this new venture income opportunity eventually, if it hasn't already.

          Yes, I do understand that regardless of where the money comes from, we do have to claim it all as income.

          One part of their instructions that stood out was that they talk mostly about vendors - and affiliates are not vendors. We are not importing anything, since most of CB is digital. When they talk about resellers, they seem to assume you will buy the product and resell it, which we don't do.

          Nowhere does it talk specifically about "affiliates". So short of talking directly to a RevCan rep, which costs nothing, we're left with paying an accountant.

          From what I understand, first you have to determine whether you are able to apply as a "registrant" (GST). So that could be a good place to start.

          Thank you for your input, Noah. You taught me something.

          Sylvia
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  • Profile picture of the author Steve Iser
    I talked to my accountant.

    Skip the bullshit and ask him.
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  • Profile picture of the author Trader54
    My income though business activity requires me to be registered an collect GST. I also sell products through clickbank.

    I was just audited by Rev Canada in November and I had no problem as clickbank clearly states that they are the retailer. It would be up to them to collect the GST just as they do the VAT.

    Now there still can be benefits to being registered with GST even if you don't have to collect it as you can be reimbursed for GST you pay for business and business related expenses.
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  • Profile picture of the author Noah Fleming
    Just something else of interest for those in Canada.

    Rev Canada went up against eBay to give up the records of Power Sellers. eBay fought it and lost.

    Anyone who was a powerseller between 2004-2006 I believe, had everything given up to Rev Canada, from items sold, auction listings, and all personal information. I have a feeling they are only going after the really big fish but a lot of people who weren't totally honest with there online dealings are going to get dinged.

    I think something similar happened in the US with the IRS?

    Rev Canada was also testing a spider that crawled the internet looking for Canadian Tax cheaters. So they are certainly getting more and more interested in Canadians earning online.

    Read about the spider here

    CTV.ca | 'Spider' crawls Internet for tax evaders
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  • Profile picture of the author peteradt
    First of all Wilson, the only people to ask this question to is either a certified accountant that specializes in online business or a lawyer and/or both.

    Nobody else...Period.

    Don't get yourself into trouble in your young internet career by following the advice of others in a forum thread of this nature... Period!

    The last thing you want is Revenue Canada breathing down your back for anything... Period.

    No debate, no he said she said, or "this is what you should do" or "this is what happened to a friend of mine and this is what they did"

    If you really value making money online and you want to run a business. then go talk to a specialist.

    You can call around and get information from accountants and lawyers for free by picking up the telephone and ask them to point you in the right direction from the word..."get go"

    As far as the article on the "spider" that the government is "testing" to catch tax cheaters, there are some issues to that as well as to how far they can and will go, and no doubt someone will "challenge" the privacy issue with the government.

    But the long and short of it, even if someone challenges the government in regards to the privacy issues that are already in question... win or lose we'll never really know if they (government) stops with their testing.

    Like the police, the government is compared to some of the biggest organized crime gangs.

    Their in every country and city ;-)

    Talk to a specialist... Period

    To your continued online success

    Peter
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    I'm just an entrepreneur who's trained thousands of students, worked with hundreds of clients to produce 6 and 7 figure incomes, a world traveler who's been to 4 continents, 102 countries, and 71 cities. Oh and here's one of my websites where I stood on stage and showed hundreds of entrepreneurs and business owners who paid $3K each how to generate a six figure income. http://internetmarketing-alchemy.com

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  • Profile picture of the author Tim_Carter
    Read this:
    B-090 GST/HST and Electronic Commerce

    My sister is a CPA and basically digital goods are zero rated if supplied outside of Canada.

    You must have proof (ip address or declaration by the customer).

    But do talk to a CPA about it.
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    • Profile picture of the author AndrewCavanagh
      This whole topic of whether gst needs to be paid when the sale of your product is made by someone outside your country to someone in your country and all the other permutations of that is a grey area.

      But be aware that it's a grey area that tax departments are looking into (tax departments all over the world are now getting very interested in internet trading).

      So yes have a talk to a qualified accountant.

      Usually the first talk is free anyway.

      You could also talk to your country's tax office.

      They are obligated to tell you exactly what the laws are and how they apply to you.

      If you do this just state things as hypothetical questions...not facts and ideally don't tell them who you are!

      Kindest regards,
      Andrew Cavanagh
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      • Profile picture of the author Trader54
        Originally Posted by AndrewCavanagh View Post


        If you do this just state things as hypothetical questions...not facts and ideally don't tell them who you are!
        Why hypothetical and not tell them who you are?

        I would rather know up front and not find out later I owe the tax.

        In Canada you can contact the GST offfice and tell them exactly what you are doing and they will give it to you in writing so you know where you stand.
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        • Profile picture of the author sylviad
          Originally Posted by Trader54 View Post

          Why hypothetical and not tell them who you are?

          I would rather know up front and not find out later I owe the tax.

          In Canada you can contact the GST offfice and tell them exactly what you are doing and they will give it to you in writing so you know where you stand.
          Talking to the government "hypothetically" can be more beneficial than diving straight in. Once they have your name, they can get curious and start checking you out.

          Taking this approach allows you time to do some personal calculations - based on any number of things including how your sales might already be in question, whether you made a mistake in the past and now have to pay for it, what you'd planned to do and now won't, or anything else.

          Don't think that the government won't take notice as soon as you start asking questions that can cast suspicions on your actions now or in the past. Next thing you know, they're looking at ALL your business actions and personal tax returns to see if you've done anything wrong. It can be a hassle AND extremely stressful once they get their claws into you. hint: tax audit for the past 7-10 years.

          If you think you have nothing to fear, by all means tell them all about you and your business.

          Personally, I would ask anonymously first to see where I stand before I let them know who I am.

          Sylvia
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