Canadian GST is a tax on goods and services that are sold in Canada. The applicable GST rate for a supply is 5%, regardless of the province in which the supply takes place. GST rates also apply to services performed in non-participating provinces. A service performed on tangible personal property is also considered a supply in the same province.
Non-participating provinces
There are several aspects of the Canadian GST that are unique in some non-participating provinces. For example, if you are based in Ontario and sell your products to customers in Newfoundland and Labrador, you will still be liable for 5% GST. This is because a supply is deemed to be made within a participating province, even if you perform the service in another province.
The HST is collected by the province when you import goods from other provinces. Unlike the GST, the provincial part of HST must be self-assessed by the taxpayer in the non-participating province. This self-assessment must be done by the end of the calendar month following the month of the tax payment.
The Canadian GST is applied to most supplies of goods and services in Canada, including real estate and intangible personal property. This includes patents, trademarks, and digitized products. While there are many exceptions to the GST, most supplies of goods and services in Canada are taxable.
Residents of Canada do not have to pay the GST/HST on mail-order goods that cost less than $20. These goods include books, periodicals, and audio-recordings. In order to claim the ITC, the supplier of the goods must be registered in Canada.
There are a few other factors that may affect the issuance of a tax receipt in Canada. First, the person carrying on the business must have a permanent establishment in Canada. If the goods are imported from another country, the importer must pay the GST/HST. Secondly, the importer must have proof that the goods have been properly taxed.
Businesses must also consider the penalties associated with failing to file their GST/HST returns. A penalty for failing to file the return is 5% of the difference between the amount reported and the actual amount. It increases by 1% every month until the error is corrected. The maximum penalty is 10%. In addition to the penalties, CRA may also charge interest on overdue amounts equal to the basic rate plus four percent.
The Value of Imported Goods (GST/HST) Regulations also provides partial relief from the federal HST. This relief applies to goods that are temporarily imported into Canada, and goods destined for a participating province. For example, motor vehicles that are registered in a participating province are exempt from the HST.
Non-resident vendors
The proposed changes to Canada’s sales tax regime will make it more difficult for non-resident vendors to avoid the tax. Under the new rules, non-resident vendors that sell digital products or operate fulfillment warehouses will be required to collect and remit GST/HST on sales of goods and services to Canadian residents. This will add another layer of complexity to an already complicated tax regime.
In addition, non-resident third-party vendors that operate distribution platforms are no longer allowed to claim input tax credits. This change will also affect non-resident distribution platform operators that do not supply to Canadian consumers. If you’re a non-resident vendor, it’s important to know the new rules before doing business in Canada.
In addition to non-resident vendors, non-resident distribution platform operators must also register for GST/HST. They must also register for GST/HST if they sell products and services to Canadian consumers. The new rules will apply to all non-resident vendors that offer digital products and services for sale.
When selling goods and services in Canada, non-resident vendors must be registered for the GST/HST in the provinces where they do business. The GST/HST regulations differ depending on whether the products or services are digital or cloud-based. The PST is applied to most non-resident products and services, including software, digital goods, and cloud-based services. Saskatchewan has introduced rules for non-resident vendors to be registered for the PST, but the rules are different from province to province. If you do business in Saskatchewan, be sure to comply with the province’s rules.
For digital products, the non-resident threshold is based on the total revenues of the past 12 months, excluding supplies made to Canadian residents via a distribution platform operator. Non-resident vendors must also register for GST/HST for their first supply and every subsequent supply. Moreover, they must keep records of all goods they store for non-resident clients.
The new regime for GST/HST registration is aimed at simplifying the process for non-resident vendors. Previously, such companies did not have to register for GST in Canada. However, as of July 2021, they are required to do so if they intend to collect tax from non-registered Canadian customers.
The new GST/HST rules will also apply to accommodation platforms that facilitate more than $30000 in annual supplies to Canadian consumers. Non-resident accommodation platform operators are also required to register for GST/HST if they do not own their properties. They also need to register if they wish to sell accommodation in Canada.
For businesses that operate a distribution platform, GST/HST compliance is easy. The only complication is that non-resident vendors do not have to collect GST on real estate sales. For such sales, the purchasers may be required to pay the tax directly to CRA.
Distribution platform operators
Distribution platform operators for Canadian GST are businesses that engage in taxable activities in Canada. These companies are exempt from registering under the regular GST/HST rules but can still register for simplified GST/HST rules. These simplified rules apply to business-to-consumer supplies and only require the collection of tax from Canadian consumers. Non-resident vendors, however, cannot claim input tax credits.
As a result, distribution platform operators must register for Canadian GST and HST if they make more than CAD $300,000. Currently, non-resident vendors are exempt from registration, but the new simplified regime will require them to do so. This registration means that non-resident vendors must report their total taxable supplies to consumers in Canada within a 12-month period, excluding any supplies made through a distribution platform operator.
A distribution platform operator is a business that facilitates the sale of a third-party foreign seller’s goods in Canada. This process includes listing the goods and payment processing. It may also include the fulfillment and delivery of the goods. If the goods are not delivered directly to the customer, the distribution platform operator must process them using a simplified GST/HST payment system.
The distribution platform operator is also responsible for collecting GST on the taxable supplies made through the platform. These taxable supplies must be taxed at the applicable rate for the province or territory where the supplier is registered. For example, a non-resident supplier might provide remote security monitoring services to an Alberta or Ontario property. Since the service relates to real property, it requires 5% GST.
Distribution platform operators are required to register for GST and HST as suppliers in Canada and charge GST on those sales. They must also collect GST if their customers are non-residents. A distribution platform operator must also collect HST, if it is required by law. For more information about these changes, read the Federal Fall Economic Statement 2020.
While these new laws have simplified the process, they are not without their own set of challenges. Many business owners are faced with balancing multiple measures and must weigh the combined impact. In some cases, a platform operator will not be required to register for GST in Canada, while other businesses will have to collect GST on behalf of their customers. Consequently, it’s crucial to understand how these changes will affect their business and what steps they need to take to comply.
In addition to determining if a DPO is required to register for GST, DPOs will need to obtain information from third-party sellers. This information could include the legal name of the remote seller, their business address, and whether the seller has registered for GST or not. These requirements will be updated over time.
The DPO will need to file an annual information return with the CRA. DPOs are responsible for facilitating sales of physical and digital goods. The CRA has provided a deferral for the first calendar year so that affected businesses can adjust to the new requirements.