The vast number of businesses now offer some kind of online shopping facility, and that means a greater need to understand tax issues surrounding items bought online.

We’re going to talk about sales tax in Canada specifically, but it’s important to point out that you also need to think about the USA and the Wayfair Decision. This was a Supreme Court decision which basically means that Canadian companies also need to register, collect and also charge sales tax (with returns) in the USA.  

Let’s Talk Goods and Services Tax (GST) and Harmonized Sales Tax (HST)

These two taxes apply to the overwhelming amount of sales of goods and services from Canada. GST is currently 5% and HST applies to higher tax rates, at 13% (which covers sales to Ontario) and also 15% if you’re making sales to other parts of Canada, e.g. Prince Edward Island, Labrador, Newfoundland, Nova Scotia, and New Brunswick.  

Canadian business with sales of $30,000 or under do not have to register for these two taxes, however those with a turnover of more than $30,000 do. There are a few anomaly rules however, so it’s vital that you look further into this, to ensure you’re not missing anything. It’s also worth pointing out that businesses which are not resident in Canada but make taxable sales to Canadian customers do.  

Where Does The Online Realm Come Into Things?

Businesses who sell goods and services online will need to collect these taxes depending upon where their customer is located. For instance, it doesn’t matter if the business is located in Ontario, but if their customer is in Newfoundland, they will need to collect the HST tax at the 15% Newfoundland rate.

There is another anomaly to consider here, the QST (Quebec Sales Tax). This is a similar tax but it does have a few side issues to think about. If your business is located in Quebec you will need to be more familiar with this tax. In addition, a business which makes a taxable sale to Quebec will need to register also.

Other Taxes to be Aware of 

There are three other taxes that you need to be aware of if you’re operating statically or online. These are:

•   British Columbia PST - Charged at 7% on all goods which are purchased within the British Columbia province, even online.

•   Manitoba PST - Charged at a rate of 7%, similarly to the British Columbia PST.

•   Saskatchewan PST - Charged at a rate of 6% for those making sales within the region.

It is important to be aware of all tax issues, whether you’re selling online or not. The huge increase in online sales has made it more prevalent to ensure that taxation from these types of sales is done correctly. This doesn’t always follow where the business is based, and is often more about where the customer is based. With that in mind, businesses, whether large or small, need to be aware of taxation issues country-wide.

Contact your Accountants today click on this link —> https://capexcpa.com/contact

- The Capex Team