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Canadian Taxes For Online Businesses

by SeanyG
16 replies
Hey Canadian friends,

I've Googled like crazy and have come up with nothing so far.

My online business is incorporated in Canada and I sell to the States, UK, Aus and pretty much every other country in the world.

The research I've done says that you have to collect GST on all sales and that you don't have to collect anything else (HST etc) as long as you don't make sales in Canada?

Is this correct?

If so why does every accountant I take my filings to get all flustered and confused about how to file taxes for an online business?

Thanks,

~Sean
#businesses #canadian #online #taxes
  • Profile picture of the author kevinw1
    You only have to collect GST on sales to Canadians. US, AUS etc - nope. You do, however, have to declare all your sales on your return. You just don't have to collect or remit tax on the sales outside Canada.

    HST is GST plus a provincial portion, so it is different for each province that uses it. Here in BC, HST is 12%. It's different other places. If you sell to a person who lives in a province which has HST, you charge them the correct HST rate for their province, and remit it all on your GST/HST return.

    This all assumes you make more than a certain total worldwide sales each year and therefore have to register for GST/HST: can't remember offhand whether it's 20K or 30K.

    Are you talking to accountants or bookkeepers. This is pretty standard stuff for any mail order biz, not just online: I'm surprised you can't find someone who knows how it works.

    Best place to find info on this is the CRA site specifically for GST and HST. Everything you need to know is there, though it sometimes takes a while to find:
    Goods and services tax/harmonized sales tax (GST/HST)
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    • Profile picture of the author SeanyG
      Super helpful reply. Thanks Kevin!

      How do you know all of this?

      I've been talking to cheap accountants. H&R block. My filing is so simple I don't want to pay $600 for a return at smaller firm.

      ~Sean

      Originally Posted by kevinw1 View Post

      You only have to collect GST on sales to Canadians. US, AUS etc - nope. You do, however, have to declare all your sales on your return. You just don't have to collect or remit tax on the sales outside Canada.

      HST is GST plus a provincial portion, so it is different for each province that uses it. Here in BC, HST is 12%. It's different other places. If you sell to a person who lives in a province which has HST, you charge them the correct HST rate for their province, and remit it all on your GST/HST return.

      This all assumes you make more than a certain total worldwide sales each year and therefore have to register for GST/HST: can't remember offhand whether it's 20K or 30K.

      Are you talking to accountants or bookkeepers. This is pretty standard stuff for any mail order biz, not just online: I'm surprised you can't find someone who knows how it works.

      Best place to find info on this is the CRA site specifically for GST and HST. Everything you need to know is there, though it sometimes takes a while to find:
      Goods and services tax/harmonized sales tax (GST/HST)
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  • Profile picture of the author Caleb Spilchen
    I also own a corp in Canada, based out of Ontario. Now, from the letter that was sent to me by Canada Government, you only need an HST # if you do over 30k in business per year... {taxable business}.

    So then, if you sell 100k to the states and Uk, but only 10k to Canada.. Wouldn't you, not have to charge tax?
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    • Profile picture of the author funkynassau
      I had this explained to me by a govt. tax person a couple of years ago. We have a small biz in Ontario. She told me that $30K was the magic number where you have to charge and collect and remit GST (this was before HST) but, the kicker was it's not based on a calendar year, it goes for a 12 month period, such as March 2010 to March 2011, or Aug. 2010 to Aug. 2011 etc. You add up how much you made in that time frame and if it's over the $30K limit, you have to charge, collect and remit GST (now HST since last July). I thought it was based on the calendar year of Jan. 1/2010 to Dec. 31/2010, but it's not.

      I know this sounds strange but that's what I was told. Anything to make reporting the numbers complicated...

      If anyone has been told anything different, I'd like to hear it, but I did go over this with the GST lady for quite a while.
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  • Profile picture of the author Tim_Carter
    Yes - if you do more than 30k in worldwide sales you must file a GST return. You only collect GST from sales made within Canada. So if a US citizen is in Canada you must collect GST. That requires some IP tracking.

    Whether someone is Canadian is immaterial. It is where the sale takes place - just like if an American goes into a Canadian Walmart and makes a purchase.
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  • Profile picture of the author Caleb Spilchen
    Yes - if you do more than 30k in worldwide sales you must file a GST return. You only collect GST from sales made within Canada. So if a US citizen is in Canada you must collect GST. That requires some IP tracking.
    In "worldwide" sales... Wouldn't that be worldwide taxable sales?

    You have to register for GST/HST when you no longer qualify as a small supplier because your total worldwide taxable supplies of goods and services exceed the small supplier limit of $30,000 in a single calendar quarter or in four consecutive calendar quarters
    "worldwide taxable sales of goods and services"

    Would that not mean, sales to people in Canada?

    Caleb
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  • Profile picture of the author Tim_Carter
    No - worldwide total sales
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  • Profile picture of the author Caleb Spilchen
    You have to register for GST/HST when you no longer qualify as a small supplier because your total worldwide taxable supplies of goods and services exceed the small supplier limit of $30,000 in a single calendar quarter or in four consecutive calendar quarters
    No - worldwide total sales
    I'm not sure why it would say "worldwide taxable supplies of goods and services"... Taxable, would be for Canadians, if those are the only ones I would have to charge tax for....

    At least, I think... You might know more then I would, I'm just quoting there site, as that confuses the heck outta me.
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  • Profile picture of the author Tim_Carter
    Worldwide total sales determines if you have to file.

    However you only pay for the portion you collect.

    In my case $xxx,xxx in total worldwide, but $xxxx sales in Canada.

    I still have to file.

    My sister is a CPA. I will find the publication and post it here.
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    • Profile picture of the author Caleb Spilchen
      Originally Posted by Tim_Carter View Post

      Worldwide total sales determines if you have to file.

      However you only pay for the portion you collect.

      In my case ,xxx in total worldwide, but sales in Canada.

      I still have to file.

      My sister is a CPA. I will find the publication and post it here.
      Yeah, please do that... Because, I'm really interested in this.. I own a corp... I wish they would publish whether a "digital good" is an "actual good".

      Caleb
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  • Profile picture of the author Tim_Carter
    Here ya go - read this carefully:

    hhttp://sbinfocanada.about.com/od/startup/f/registerGST.htm

    "he Canada Revenue Agency defines a GST Small Supplier as a sole proprietor, partnership, or corporation whose total taxable revenues before expenses are $30,000 or less annually"

    We don't sell zero rated supplies as digital goods and services are taxable.

    So if you pass the 30K in total taxable sales you have to file.
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    • Profile picture of the author SeanyG
      Originally Posted by Tim_Carter View Post

      Here ya go - read this carefully:

      hhttp://sbinfocanada.about.com/od/startup/f/registerGST.htm

      "he Canada Revenue Agency defines a GST Small Supplier as a sole proprietor, partnership, or corporation whose total taxable revenues before expenses are $30,000 or less annually"

      We don't sell zero rated supplies as digital goods and services are taxable.

      So if you pass the 30K in total taxable sales you have to file.
      Hey Tim,

      The term taxable sales is sales made in Canada to Canadians.

      If your sales come from elsewhere you don't need to register for GST or HST or collect it.
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      • Profile picture of the author methodical77
        Originally Posted by SeanyG View Post

        Hey Tim,

        The term taxable sales is sales made in Canada to Canadians.

        If your sales come from elsewhere you don't need to register for GST or HST or collect it.
        This site is great. Many thanks to everyone who posts.
        It's my first time here, my first post, and first question.

        SeanyG, are you sure about this?

        I haven't asked my accountant yet about how this specifically applies to digital content or merchant businesses but to the best of my understanding "total taxable revenues before expenses" means worldwide.

        Thanks in advance.
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  • Profile picture of the author Caleb Spilchen
    Yeah, the first papers I got told me I needed to get an HST number if that, so I guess I'll have to file, if I look back at the end of this QR.

    Caleb
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    • Profile picture of the author SeanyG
      Originally Posted by Caleb Spilchen View Post

      Yeah, the first papers I got told me I needed to get an HST number if that, so I guess I'll have to file, if I look back at the end of this QR.

      Caleb
      You only need to collect HST if you make over $30,000 in sales to Canada. If you don't sell to Canada or its under $30,000 then you don't have to worry.
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  • Profile picture of the author Dexx
    Any Canadians here have experience selling iPhone Apps in the Itunes store yet?

    I'm hearing the GST/HST headache associated with that is a pain for our tax time up here (regarding what Apple has taken, what the IRS gets, and what the CRA wants) etc.

    Curious if anyone has had to deal with that yet...

    ~Dexx
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