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Goods and Service Tax for Canadians who have Clickbank Products

by pojax
32 replies
Ok,

I got a call from revenue Canada today saying we (me and my partner) must send in the goods and services tax/harmonized sales tax (gst/hst) return for registrants.

Was due in march. reporting period - feb 01/ 20011 - 12/31/11.

I have a business and only income we get is from Clickbank.

What do you guys suggest I do? Do clickbank charge this GST and HST from all payments that is made from Canadians? If so do they pay the federal gov't (revenue canada) on my behalf? or am i responsible for this.

Please help. We do file taxes individually from income but this is the first time I am asked to pay GST/HST.

Errol
#canadians #clickbank #goods #products #service #tax
  • Profile picture of the author KirkMcD
    CB is your only customer and you are exporting your product to them. You shouldn't need to pay the taxes, but you should talk to a tax accountant so that you can fill out the form properly.
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  • Profile picture of the author onSubie
    Hi

    I believe you have to charge GST on any sale you make to customers in Canada.

    Your affiliates that are not in Canada do not have to charge GST. Canadian affilaites would be responsible for collecting and submitting their GST from their Canadian sales.

    Your customers who are not in Canada do not have to pay GST.

    GST must be collected on any Canadian sales to Canadians. Foreign visitors can apply for a refund of the GST they pay while visiting if they keep the receipts and apply for the refund.

    If most sales are direct from you, then you will have to pay the GST. If most of your sales are from affiliates, you may not have to pay as much for GST.

    It doesn't really matter that Clickbank is in the U.S. and it doesn't matter if you are an affiliate or a product owner. If your company is in Canada, and your customer is in Canada, you must collect GST on sales.

    Of course, this only applies if you pass a certain annual amount in sales- I think $30,000. If your sales are less than the annual exemption amount then you would still need to submit a return to CRA but you wouldn't have to pay any GST.

    Since Canada Revenue contacted you, they obviously feel that your sales require you submit a GST return for your company. That is not the same as saying you will actually need to pay any GST after exemptions and deductions.

    I would suggest seeing an accountant familiar with this sort of business to look at your situation.

    EDIT:

    Here is Canada Revenue's information:

    http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html

    A "taxable supply" is a sale.

    Mahlon
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  • Profile picture of the author onSubie
    Originally Posted by Chris Kent View Post

    Revenue Canada are wrong in this case. You don't receive income from customers. You receive it from Clickbank only. They are Clickbank's customers and not yours.

    This is incorrect.

    You are a Canadian company in Canada selling to Canadians. The product will be downloaded and used in Canada. This is one of the determining factors.

    The income is coming from a Canadian customer to a company in Canada for a good/service that will be used in Canada. Those sales require GST if they are above the annual exemption.

    Just as with physical products. If I am a Canadian company selling widgets to a Canadian customer in Canada, I have to charge GST. Even if those products are manufactured and drop shipped from the US or China.

    Clickbank is only the transaction processor and product delivery service. You do not have a subsidiary relationship with Clickbank. That's like saying "I don't get my income from customers, I get it from Visa".

    Remember- he already has a request from Canada Revenue to submit a GST Return for his business. It may be that once submitted, the determination is that he does now have to pay any GST. But ignoring a request to file a return from the revenue service in any country is never a good idea.

    Canada Revenue is very familiar with online ecommerce and have agreements with PayPal and other processors to report the revenue of Canadians making money online. They know what Clickbank is and how it works.

    Read the link to CRA I posted above and consult an accountant if you are concerned.

    Mahlon
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    • Profile picture of the author onSubie
      Originally Posted by Chris Kent View Post

      If he is using Clickbank then it is Clickbank who are the seller. Clickbank take and taxes for customers all over the world and pay it on to their respective tax authorities, Canadian or not.
      They only do this for the EU VAT. They do not do this for Canadian GST. And they do it as a service to EU marketers, not because they are the owner or seller of the products.


      These Canadian customers are buying from an American company, Clickbank. They are not buying from the OP.

      Clickbank is NOT just the transaction processor. They are the seller. In fact, if you try to get a product approved by calling them a transaction processor, they won't approve it, because it's an incorrect description.
      Not according to Canadian tax law.

      In fact I would suggest you would have hard time finding anyone to agree that Clickbank is the product owner and seller while vendors and affiliates and affiliates of vendors work for Clickbank.

      You are saying I create a product, sell it on Clickbank and then Clkickbank owns the product not me? They can just cut me out of the loop (since I am neither the owner nor seller) and keep 100% of the revenue themselves? They are paying me commissions based on charity and not because I am the product owner and seller?

      That is wrong. I own the product and I can sell it other places as well as Clickbank and I can remove the product from Clickbank at any time.

      You will notice that no sales are done through Clickank. All sales are done with stand-alone website sales pages that only interact with Clickbank to process the transaction when someone clicks "Buy".


      You make a comparison with Paypal but that is not appropriate. Clickbank do not operate like Paypal. Clickbank act as seller. I suggest you read up on how Clickbank works because you have it wrong.
      It would help if you posted a link to back up your inane arguments so I can "read up on how Clickbank works".

      If you wrote an ebook that was an illegal way of making money online and eventually the FTC caught on, they would go after you, not Clickbank.

      Clickbank may suffer a penalty if they can be shown to be negligent or complicit, but the FTC and other agencies do not view Clcikbank as the owner and seller.


      In any case, I am not arguing about what you think Clickbank is, I am informing the OP of how Canada Revenue agency views online sales and collecting GST.

      Someone following your advice and ignoring filing tax returns from revenue agencies is looking for a world of trouble.

      Canadian Affiliate Marketers: Did You File GST on Those Commissions?

      Mahlon
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      • Profile picture of the author onSubie
        Originally Posted by Chris Kent View Post

        And I'm not sure why you claim I suggest the OP "ignore" this request? Of course he shouldn't! He should straight up tell the Canadian revenue what his situation is. Don't make things up, please.
        As I said, I wasn't trying to argue with you about what Clickbank is or isn't, that is a moot point. One I happen to disagree with, but not relevant to the OPs problem.

        My point is that CRA is very aware of how online commerce works, knows what Clickbank is and wants a return filed by the OP.

        If you are a Canadian company selling a product (via Clickbank or anything else) to Canadians, then Revenue Canada expects you to collect GST if the sales are over $30,000/yr.

        If you are not exempt (as the OP seems not to be since CRA made a request for him to file) then you must file a return. On this return you will detail the source of sales and revenue, gross income, deductions, etc.

        If your argument is true and the OP can show that his sales through Clickbank do not count as sales and revenue for GST purposes, that would be indicated on the return.

        I disagree that Canada Revenue views Clickbank revenues the same way you do. But, as I said, moot point.

        Mahlon
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      • Profile picture of the author Mike Hill
        Originally Posted by Chris Kent View Post

        Believe what you want, I sleep well at night. I've been CB vendor and affiliate for many years. They are the seller, period.

        I never said they "own" the product. According to the contract between the vendor and Clickbank, there is no transfer of intellectual property rights. But it is clear as night and day that Clickbank are the seller. CB do not collect EU VAT as a "service" for vendors. They do it because they are the seller and they are legall obliged to do so by EU law when selling to EU citizens. Why bring upon a huge accounting headache as a service? Clickbank need not go to such lengths if they don't have to. The fact is: they do have to, it's a legal obligation.

        And you are wrong about who the FTC would go after. In fact, FTC and Clickbank have a dialogue for many years and are very cooperative. FTC know full well that Clickbank are the seller and not their vendors. As part of the vendor contract, Clickbank try to indemnify themselves for risk management purposes, precisely because they are the legal seller.

        You mentioned that one can sell a product at Clickbank simultaneously as other places. That's irrelevant.

        I had a look at your link by the way. Canadian revenue demand tax on affiliate payments from Canadian merchants (a little harsh, in my view). But it's irrelevant. Because the OP is not an affiliate and nor is he a merchant. Clickbank is the merchant, and besides, they are not Canadian. Your link is for cases where you are getting paid by a Canadian merchant - seems they are obliged to pay you VAT on top of your commissions. This is a totally different scenario to the OP.

        And I'm not sure why you claim I suggest the OP "ignore" this request? Of course he shouldn't! He should straight up tell the Canadian revenue what his situation is. Don't make things up, please.

        This is the correct answer Chris is absolutely right...

        And when anyone from Canada visits an accountant or lawyer make sure you take ClickBank's Terms Of Service, etc with you so you can prove it.
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        • Profile picture of the author onSubie
          Originally Posted by Mike Hill View Post

          This is the correct answer Chris is absolutely right...

          And when anyone from Canada visits an accountant or lawyer make sure you take ClickBank's Terms Of Service, etc with you so you can prove it.
          It's not Clickbank ToS that matter it is Canadian tax law. That's why I suggested he see a tax lawyer/accountant and file the return as requested.

          The OP received a call from Revenue Canada asking that he file a GST return and he asked what to do.

          I disagree that Canada Revenue views a Canadian company selling its own products through Clickbank to Canadians as exempt from GST because Clickbank is the vendor.

          A link verifying these claims would help because all the Google searches I have done turn up information and articles that contradict what you say.

          Mahlon

          EDIT:

          Actually here it is right from Clickbank ToS:

          3. Selling Products:
          g) For any retail transaction involving a physical Product, ClickBank will collect and remit state or local transfer taxes (including but not limited to sales or use tax) where it is legally required to do so. Where ClickBank does not collect and remit state or local transfer taxes on a transaction, it is possible that You will have the legal obligation to pay such taxes. Under the laws of a state, such obligation may arise as a result of: (1) Your existing or past physical contacts with that state; and (2) Your provision of a "drop ship" delivery of the physical Product to a buyer located in that state. You may wish to consult a tax professional to determine if You will have this type of obligation in any particular state. You agree that if such an obligation arises with respect to any particular state, You will be solely responsible for the timely payment of such tax. You further agree that if such an obligation arises, and You do not timely pay such tax, You will be solely responsible for any resulting tax, interest and penalties.

          13. General Terms and Conditions
          c) Our Relationship. This Agreement does not create any relationship of principal and agent, partners, joint venturers, employer and employee, fiduciary or similar relationship between the parties. You agree that any content stored on ClickBank's servers in relation to any Products registered by You via the ClickBank Services is solely at Your direction and nothing contained in this Agreement nor in Your use of the ClickBank Services, shall be construed as shifting responsibility for such publication to ClickBank. You are not authorized to make any promise, warranty or representation on behalf of ClickBank or obligate or attempt to obligate ClickBank in any manner whatsoever. You shall not represent to any person that You are the agent of ClickBank, nor fail to correct any misunderstanding as to such status.
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          • Profile picture of the author Mike Hill
            Originally Posted by onSubie View Post

            It's not Clickbank ToS that matter it is Canadian tax law. That's why I suggested he see a tax lawyer/accountant and file the return as requested.

            The OP received a call from Revenue Canada asking that he file a GST return and he asked what to do.

            I disagree that Canada Revenue views a Canadian company selling its own products through Clickbank to Canadians as exempt from GST because Clickbank is the vendor.

            A link verifying these claims would help because all the Google searches I have done turn up information and articles that contradict what you say.

            Mahlon

            ClickBank is the seller... they make the purchase from the vendor and sell the product. ClickBank is a US company... Why do you not get this... The vendor becomes a supplier to a US company

            This is right from ClickBank's website:

            "Each time you sell a product through ClickBank, without respect to the location of the buyer, we purchase the product from you at wholesale price,"
            Here’s an example:
            Your product sells for $100.
            ClickBank purchases the product from you for $91.50. (92.5% of $100, minus $1)
            You have chosen to pay a commission of 50%, so 50% of the remainder goes to the referring affiliate, which equals $45.75.

            http://www.clickbank.com/help/vendor...endor-charges/

            And why are you doing Google Searches when it's right on ClickBank's website?????
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          • Profile picture of the author Mike Hill
            Originally Posted by onSubie View Post

            It's not Clickbank ToS that matter it is Canadian tax law. That's why I suggested he see a tax lawyer/accountant and file the return as requested.

            The OP received a call from Revenue Canada asking that he file a GST return and he asked what to do.

            I disagree that Canada Revenue views a Canadian company selling its own products through Clickbank to Canadians as exempt from GST because Clickbank is the vendor.

            A link verifying these claims would help because all the Google searches I have done turn up information and articles that contradict what you say.

            Mahlon

            EDIT:

            Actually here it is right from Clickbank ToS:

            3. Selling Products:
            g) For any retail transaction involving a physical Product, ClickBank will collect and remit state or local transfer taxes (including but not limited to sales or use tax) where it is legally required to do so. Where ClickBank does not collect and remit state or local transfer taxes on a transaction, it is possible that You will have the legal obligation to pay such taxes. Under the laws of a state, such obligation may arise as a result of: (1) Your existing or past physical contacts with that state; and (2) Your provision of a "drop ship" delivery of the physical Product to a buyer located in that state. You may wish to consult a tax professional to determine if You will have this type of obligation in any particular state. You agree that if such an obligation arises with respect to any particular state, You will be solely responsible for the timely payment of such tax. You further agree that if such an obligation arises, and You do not timely pay such tax, You will be solely responsible for any resulting tax, interest and penalties.

            13. General Terms and Conditions
            c) Our Relationship. This Agreement does not create any relationship of principal and agent, partners, joint venturers, employer and employee, fiduciary or similar relationship between the parties. You agree that any content stored on ClickBank's servers in relation to any Products registered by You via the ClickBank Services is solely at Your direction and nothing contained in this Agreement nor in Your use of the ClickBank Services, shall be construed as shifting responsibility for such publication to ClickBank. You are not authorized to make any promise, warranty or representation on behalf of ClickBank or obligate or attempt to obligate ClickBank in any manner whatsoever. You shall not represent to any person that You are the agent of ClickBank, nor fail to correct any misunderstanding as to such status.

            Your reference above refers to PHYSICAL PRODUCTS..... where as you deliver the product yourself.

            Good grief.... did you even read the statement you referenced? :confused:

            And if you're saying that this statement you referenced above contradicts what I'm saying you are wrong again... I'm talking about digital products and all your references are talking about physical products.
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            • Profile picture of the author onSubie
              Originally Posted by Mike Hill View Post

              Your reference above refers to PHYSICAL PRODUCTS..... where as you deliver the product yourself.
              Yes, I did notice they specified "physical products". However they do not specify "digital products" in any other sections.

              My speculation is that in the US, only physical products have this concern (hence the problems Amazon is facing) and that is why Clickbank spells it out explicitly. I doubt they accept all those responsibilities for their digital products.

              Perhaps you could include the link that clarifies this for digital products?

              Most US states do not have an "Internet Tax". Canada Revenue does recognize Internet sales, ecommerce and digital products.

              As I said, it is Canadian tax law and not Clickbank ToS that applies. In any event, Clickbank seems to say it is the vendors responsibility to collect any taxes not collected by Clcikbank (granted, they specify physical products) and go to great lengths to distance themselves from any relationship with vendors (see section 13).

              You can read Canada Revenue's bulletin on GST/HST and Ecommerce here:

              http://www.cra-arc.gc.ca/E/pub/gm/b-090/b-090-e.pdf

              "Property" means "any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money."


              And no need to shout. If we are going to hijack a thread, we may as well keep it civil LOL

              At any rate, I doubt we will get further in this without actually going to court.

              Mahlon
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              • Profile picture of the author Mike Hill
                Originally Posted by onSubie View Post

                Yes, I did notice they specified "physical products". However they do not specify "digital products" in any other sections.

                My speculation is that in the US, only physical products have this concern (hence the problems Amazon is facing) and that is why Clickbank spells it out explicitly. I doubt they accept all those responsibilities for their digital products.

                Perhaps you could include the link that clarifies this for digital products?

                Most US states do not have an "Internet Tax". Canada Revenue does recognize Internet sales, ecommerce and digital products.

                As I said, it is Canadian tax law and not Clickbank ToS that applies. In any event, Clickbank seems to say it is the vendors responsibility to collect any taxes not collected by Clcikbank (granted, they specify physical products) and go to great lengths to distance themselves from any relationship with vendors (see section 13).

                You can read Canada Revenue's bulletin on GST/HST and Ecommerce here:

                http://www.cra-arc.gc.ca/E/pub/gm/b-090/b-090-e.pdf

                “Property” means “any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money.”


                And no need to shout. If we are going to hijack a thread, we may as well keep it civil LOL

                At any rate, I doubt we will get further in this without actually going to court.

                Mahlon
                Wow... You are a supplier who is supplying one US company. You are not selling to Canadians, ClickBank is. You are not the one collecting GST/HST.

                Example: When a business owner goes to CostCo to purchase directly for their business for the purpose of resale they are tax exempt on their purchase at CostCo because the business owner is collecting the tax at the point of sale. Get it?

                Now, you (supplier) are supplying ClickBank with your product and ClickBank (the seller) is not obligated to collect GST/HST.

                However, you still pay income tax on that income. I think you're confused about the two.

                That's about as simple as I can explain it. I've run out of ideas to make you understand this simple concept of how business works.
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          • Profile picture of the author James Campbell
            Originally Posted by onSubie View Post

            It's not Clickbank ToS.....
            Sweet Jeebus. Stop spreading misinformation OR get a better accountant and lawyer.

            When you are a wholesale manufacturer your only customer are the distributors, and in this case Clickbank is the distributor who purchases your product from you at a set fee schedule and every sale that is made is considered a resale by the distributor (clickbank) and not you. Therefore your only customer is not Canadian and you DO NOT have to collect GST.

            Apparently you have a really poor grasp on this or just a really misinformed accountant/lawyer.
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            • Profile picture of the author onSubie
              Originally Posted by James Campbell View Post

              When you are a wholesale manufacturer your only customer are the distributors, and in this case Clickbank is the distributor who purchases your product from you at a set fee schedule and every sale that is made is considered a resale by the distributor (clickbank) and not you. Therefore your only customer is not Canadian and you DO NOT have to collect GST.
              Yes, and as a wholesaler you would need the GST number of your distributors in order to be exempt from the GST (they will collect it) and to differentiate between your wholesale sales and retail sales (some wholesalers/manufacturers do both).

              You can't just say "I'm a wholesaler" and then Canada Revenue says "Oh great, in that case no GST". You need to provide the GST numbers of your distributors so Canada Revenue can see where the GST (if required) was collected.

              This would all be recorded on the GST return that Canada Revenue has asked the OP to file.

              Originally Posted by Mike Hill View Post

              Example: When a business owner goes to CostCo to purchase directly for their business for the purpose of resale they are tax exempt on their purchase at CostCo because the business owner is collecting the tax at the point of sale. Get it?
              They need to provide Cosco with their GST number to do that. Cosco would then include that information under exemptions on their GST return.

              Mahlon

              EDIT: I have seen no evidence and read no ToS that says the relationship Clickbank has with its vendors is a manufacturer-wholesaler relationship. It would be very beneficial if you could post some links to support those arguments.

              EDIT2: I am not saying the OP is required to pay GST, I'm saying he is required to file a return.

              I am also saying Canada Revenue is wise to online ecommerce like ebay, Clickbank, Amazon, etc and they know Canadians are selling a lot of goods and services to other Candians online. They have specific requirements and rules about when GST must be collected. They don't get confused about the complex logistics so you need to have your ducks in a row when challenging them.
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              • Profile picture of the author Mike Hill
                Originally Posted by onSubie View Post

                Yes, and as a wholesaler you would need the GST number of your distributors in order to be exempt from the GST (they will collect it) and to differentiate between your wholesale sales and retail sales (some wholesalers/manufacturers do both).

                You can't just say "I'm a wholesaler" and then Canada Revenue says "Oh great, in that case no GST". You need to provide the GST numbers of your distributors so Canada Revenue can see where the GST (if required) was collected.

                This would all be recorded on the GST return that Canada Revenue has asked the OP to file.

                Mahlon
                NOT if they are US based because US companies are not obligated to collect GST...
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              • Profile picture of the author Mike Hill
                Originally Posted by onSubie View Post

                Yes, and as a wholesaler you would need the GST number of your distributors in order to be exempt from the GST (they will collect it) and to differentiate between your wholesale sales and retail sales (some wholesalers/manufacturers do both).

                You can't just say "I'm a wholesaler" and then Canada Revenue says "Oh great, in that case no GST". You need to provide the GST numbers of your distributors so Canada Revenue can see where the GST (if required) was collected.

                This would all be recorded on the GST return that Canada Revenue has asked the OP to file.



                They need to provide Cosco with their GST number to do that.

                Mahlon
                Yes you proved my point... Since ClickBank is a US company and they are not obligated to collect GST then you do not collect it from the sales generated through ClickBank on your own products.

                But if you want to go right ahead...

                PS. and yes of course YOU have to provide a GST number to be exempt because you are selling the products from Canada to Canadians. But if you were to sell from Canada to a US customer you do not collect the GST. Since you are a supplier to ClickBank GST does not apply...
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              • Profile picture of the author Mike Hill
                Originally Posted by onSubie View Post

                Yes, and as a wholesaler you would need the GST number of your distributors in order to be exempt from the GST (they will collect it) and to differentiate between your wholesale sales and retail sales (some wholesalers/manufacturers do both).

                You can't just say "I'm a wholesaler" and then Canada Revenue says "Oh great, in that case no GST". You need to provide the GST numbers of your distributors so Canada Revenue can see where the GST (if required) was collected.

                This would all be recorded on the GST return that Canada Revenue has asked the OP to file.



                They need to provide Cosco with their GST number to do that. Cosco would then include that information under exemptions on their GST return.

                Mahlon

                EDIT: I have seen no evidence and read no ToS that says the relationship Clickbank has with its vendors is a manufacturer-wholesaler relationship. It would be very beneficial if you could post some links to support those arguments.

                I did provide a link... look up, way up in the threads...

                They mention they purchase from you at "wholesale pricing".
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              • Profile picture of the author Mike Hill
                Originally Posted by onSubie View Post

                Yes, and as a wholesaler you would need the GST number of your distributors in order to be exempt from the GST (they will collect it) and to differentiate between your wholesale sales and retail sales (some wholesalers/manufacturers do both).

                You can't just say "I'm a wholesaler" and then Canada Revenue says "Oh great, in that case no GST". You need to provide the GST numbers of your distributors so Canada Revenue can see where the GST (if required) was collected.

                This would all be recorded on the GST return that Canada Revenue has asked the OP to file.



                They need to provide Cosco with their GST number to do that. Cosco would then include that information under exemptions on their GST return.

                Mahlon

                EDIT: I have seen no evidence and read no ToS that says the relationship Clickbank has with its vendors is a manufacturer-wholesaler relationship. It would be very beneficial if you could post some links to support those arguments.

                If you believe a US company that only has offices in the USA needs a GST number for Canada then you are not very well informed about international business.

                I found the document you are probably reading and getting all confused about but you are not importing anything, you are not selling anything to a customer. ClickBank sells the product. You are the supplier to a company outside of Canada. Revenue Canada even ask you this question about supplying a company outside of Canada, just in lawyer speak...

                Good grief...Now you go back and edit your previous comments. Of course you still file a return... with ZERO's in it... BUT if you only have ClickBank products then you don't even need a GST number.... hello

                The only reason you have to pay GST if you are selling through eBay as a business to a Canadian and you are from Canada is because YOU are doing the selling. These are two different models. What you were saying is that you have to collect the GST from Canadians on ClickBank sales which is clearly NOT the case.
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                • Profile picture of the author onSubie
                  Originally Posted by Mike Hill View Post

                  NOT if they are US based because US companies are not obligated to collect GST...
                  Originally Posted by Mike Hill View Post

                  Yes you proved my point... Since ClickBank is a US company and they are not obligated to collect GST then you do not collect it from the sales generated through ClickBank on your own products.
                  Originally Posted by Mike Hill View Post

                  If you believe a US company that only has offices in the USA needs a GST number for Canada then you are not very well informed about international business.

                  Oh maybe you misunderstood me.

                  I was talking about the OP and Canadian sellers. I did not mean the US distributors would have to collect GST or file a return. I meant the OP would have to indicate who the distributors were (and their GST number if Canadian) to show those sales are GST exempt.

                  I didn't mean to imply that non-Canadian companies would be required to collect tax. If GST exempt sales are to a non-Canadian distributor (say Clickbank to take your side of the argument) then Canada Revenue would not require GST from anybody on those sales.

                  My argument is I don't believe Canada Revenue views the Clickbank-Vendor relationship this way. But I haven't been able to find a source that clarifies it definitively other than Canadian Clickbank vendors who have been audited and required to pay GST.



                  Originally Posted by Mike Hill View Post

                  I did provide a link... look up, way up in the threads...

                  They mention they purchase from you at "wholesale pricing".
                  Oh yes- I saw it now. Thanks!

                  It is very interesting how Clickbank words that section. Now I am very curious about CRA's actual view of Clickbank. I would suspect that just because Clickbank buys "at a wholesale price" does not necessarily mean it meets the definition of "wholesaler" under tax law. CRA's regulations specify digital products in general but not Clickbank specifically so it would be interesting to know.



                  I'm wondering this- to take us speculatively on a rhetorical tangent....

                  I am a Canadian company that designs high-end golf clubs. The clubs are conceived and designed in Canada and owned by my company which is in Canada.

                  They are physically manufactured in China then stored and shipped from a warehouse in Arizona. We sell wholesale to sports stores across Canada. No GST is collected as the retailers will charge GST when they sell retail in their stores.

                  We also sell retail directly from our website diamondgolfclubs.ca.

                  The website is on US based servers like Hostgator but maintained from our offices in Canada. Orders are shipped directly from the warehouse in Arizona to the Canadian address provided by the online customer.

                  Am I required to collect GST on my retail sales to Canadians through my website even though the physical products are manufactured, warehoused and shipped from outside Canada?

                  As I said, rhetorical and I have no idea....



                  Mahlon

                  EDIT:

                  Originally Posted by Mike Hill View Post

                  Good grief...Now you go back and edit your previous comments.
                  ?? I didn't change any of my original text (unless to fix a typo) I just added more info and indicated the new info with EDIT tags so as to not create a consecutive post. Is there something you are referring to specifically?
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                  • Profile picture of the author Mike Hill
                    Originally Posted by onSubie View Post

                    Oh maybe you misunderstood me.

                    I was talking about the OP and Canadian sellers. I did not mean the US distributors would have to collect GST or file a return. I meant the OP would have to indicate who the distributors were (and their GST number if Canadian) to show those sales are GST exempt.

                    I didn't mean to imply that non-Canadian companies would be required to collect tax. If GST exempt sales are to a non-Canadian distributor (say Clickbank to take your side of the argument) then Canada Revenue would not require GST from anybody on those sales.

                    My argument is I don't believe Canada Revenue views the Clickbank-Vendor relationship this way. But I haven't been able to find a source that clarifies it definitively other than Canadian Clickbank vendors who have been audited and required to pay GST.





                    Oh yes- I saw it now. Thanks!

                    It is very interesting how Clickbank words that section. Now I am very curious about CRA's actual view of Clickbank. I would suspect that just because Clickbank buys "at a wholesale price" does not necessarily mean it meets the definition of "wholesaler" under tax law. CRA's regulations specify digital products in general but not Clickbank specifically so it would be interesting to know.



                    I'm wondering this- to take us speculatively on a rhetorical tangent....

                    I am a Canadian company that designs high-end golf clubs. The clubs are conceived and designed in Canada and owned by my company which is in Canada.

                    They are physically manufactured in China then stored and shipped from a warehouse in Arizona. We sell wholesale to sports stores across Canada. No GST is collected as the retailers will charge GST when they sell retail in their stores.

                    We also sell retail directly from our website diamondgolfclubs.ca.

                    The website is on US based servers like Hostgator but maintained from our offices in Canada. Orders are shipped directly from the warehouse in Arizona to the Canadian address provided by the online customer.

                    Am I required to collect GST on my retail sales to Canadians through my website even though the physical products are manufactured, warehoused and shipped from outside Canada?

                    As I said, rhetorical and I have no idea....



                    Mahlon
                    To answer the later part of your question above, yes you are required to collect GST because you are using your own payment processor and you are conducting the sale to Canadians from Canada.


                    The main sticking points to look at for ClickBank are: (Remember ClickBank is now the seller)
                    1. ClickBank is a seller (wholesaler of your products)
                    2. The point of sale happens outside of Canada on ClickBank's ISP's (when they use PayPal notice how it's ClickBank's PayPal account and not yours)

                    You are referring to the CRA GST/HST and electronic eCommerce guide but they only refer to collecting GST on digital goods and services if the payment is being processed on Canadian servers and or canadian payment processors inside of Canada.

                    Since ClickBank does not fall into this category you do not collect GST/HST on those sales. You are not selling your own products when you allow ClickBank to handle the sale. You are a supplier to ClickBank and they conduct the sale.

                    That being said, if you were using your own PayPal business account instead of ClickBank to make the sale then you would have to collect the GST on Canadian orders provided you are selling over $30,000 per year because PayPal has offices in Canada.

                    That's why people open separate businesses for each product if they sell a lot of them. Then they would only collect GST from Canadians on each product they sell $30,000 per year on because each is a completely different business regardless of the owner.

                    Now, of course income tax is a whole other ball game.... but we are not discussing that here.

                    And also take note that I am not a lawyer... but any somewhat competent lawyer worth salt will see what I am saying here.
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                    • Profile picture of the author onSubie
                      1. ClickBank is a seller (wholesaler of your products)
                      This is the point I disagree with. I don't think Canada revenue sees it this way. I may be wrong. CRA may see Clickbank as a wholesaler and not require GST, but my argument is against that premise.


                      2. The point of sale happens outside of Canada on ClickBank's ISP's (when they use PayPal notice how it's ClickBank's PayPal account and not yours)

                      You are referring to the CRA GST/HST and electronic eCommerce guide but they only refer to collecting GST on digital goods and services if the payment is being processed on Canadian servers and or canadian payment processors inside of Canada.

                      Since ClickBank does not fall into this category you do not collect GST/HST on those sales. You are not selling your own products when you allow ClickBank to handle the sale. You are a supplier to ClickBank and they conduct the sale.
                      I agree with your argument if CRA sees it that way. But my argument is I don't think CRA does.

                      Since the OP is in Canada, it is his product that he created in Canada and he sells the product to Canadians from his own website, he must collect GST if gross sales are over 30K. It doesn't matter that he uses Clickbank as the sales vehicle and processor. IMHO

                      I understand your argument. Basically the same thing, except Clickbank is the seller and when the OP sells his to Canadians through his website, it is actually Clickbank who is the seller. As evidenced by the fact that it is the Clickbank merchant account that the customer actually pays. Clickbank is not required to collect GST as a US company, therefore the OP is not required to collect GST on product sales through Clickbank.

                      I just don't think that because Clickbank buys at 'wholesale prices' and processes transactions on your behalf that it meets the criteria for Canada Revenue exemption on sales by Canadian companies.

                      You can't actually buy a product from Clickbank. You can only buy the product through the vendor's website. Clickbank's website offers no opportunities to buy products. It offers the ability to register a product as a vendor or promote products as an affiliate. Hard to say Clickbank is more than a processor when you can't actually buy the product from them.

                      Mahlon
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            • Profile picture of the author Adam X
              Well, from my understanding,

              1)Its clickbank, that invoices the customer and collects the fees. The product owner does not invoice anyone.Transactions clearly show clickbank as the seller, be it on a bank or credit card statement.
              2) clickbank is a US based company with no permanent establishment in Canada
              3) Sales outside of Canada are exempt from GST. It appears all sales are to clickbank, a US based company.

              I don't see where the OP would be liable for GST on any sales made by clcikbank.

              Also, if you are registered for the GST (i.e, have a Business Number) , you are sent a form to file when it is time to file your return. If you don't file it, you will get a call requesting the form be filed. This does not mean you are obligated to pay GST on all your sales. You simply enter the amount of sales , and in the GST collected Box, you enter the amount of GST collected. If all sales are foreign sales, that amount would be Zero.
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  • Profile picture of the author critterman
    I am far from an accountant but to me the relationship that I pick up on is the Clickbank is your employer and you are a salesperson for them and when you sell something for them they pay you with a commision.

    I could be totally way off but thats what it seems like in my little mind.

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  • Profile picture of the author shane_k
    To the OP, your best solution is to just talk to an accountant.
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  • Profile picture of the author marketwarrior06
    Banned
    Don't get it, Why you have to pay the taxes? I think you are experting the products to CB and they have to pay the taxed. you may talk to their support for detail.
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  • Profile picture of the author Trader54
    ClickBank sells the product and sells its from their website which is located in the USA. They also decide if and when to refund a product not you.

    I operate a business in Canada for which I collect the goods and services tax. When I started selling on ClickBank a few years back I contacted rev Canada about collecting the tax on selling digital products on Clickbank. I showed them the Clickbanks TOS which clearing states they are the retailer and you are the wholesaler. They therefore ruled that I do not collect the tax.

    A few years later I was audited. I wondered what the auditor would say about the clickbank sales and if he/she would have the same ruling as I had gotten earlier.

    She came up with the same conclusion. ClickBank being locating in the USA was the retailer as they take the customers money and control the sale, refunds etc. I'm exporting the product so therefore there is no goods and services tax to be collected.

    Not giving or to be taken as advice but this is how it has gone down for me.
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  • Profile picture of the author talfighel
    You have got to explain to them that you are not dealing with the customers. Clickbank is. There is no way that you can provide this to them because CB doesn't either. The only thing you can do is to show them the checks that CB sent you.

    If you are a store online that ships products to customers and they pay you directly with credit card or personal customer checks, that is a different story.
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  • Profile picture of the author Mike Hill
    I can't believe you're still going on about this onSubie ... clearly you do NOT understand what is being said time and time again here and not just by me. You really need to contact an accountant and show them where the money is being collected and controlled and by whom. That should clear it up for you.

    However, you are entitled to challenge this but I just can't see why your fighting so hard to pay taxes on things you clearly don't need to be collecting.

    Food for thought onSubie if you think you're right about this then how are you going to keep track of who is Canadian and who is not? Sounds impossible because you DO NOT control the transaction or the refunds. ClickBank handles those...
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