Canadian Sales Tax

You are required to collect 5% of the sales of the goods and services you sell in Canda on behalf of the Canada Revenue Agency.   For provinces participating in the harmonized sales tax HST, it is 13-15%:

  • Ontario  — 13%;
  • Nova Scotia, Newfoundland, New Brunswick, Prince Edward Island  — 15%

You must remit this money to the Canada Revenue Agency on a timely basis.  You can offset the money you collect with input tax credits (the 5% GST you pay on qualifying expenditures).

Important thresholds:

  1. Under $30K of sales in Canada your a small supplier and not required to register for and charge GST.
  2. Under $400,000 of revenue + GST collected allows you to file GST on a simplified method granted your election to use the quick method has been approved. However, you should remit it quarterly on a timely basis.
  3. Under $1.5 million of revenue, you are required to file your GST annually but you should prepay quarterly installments.
  4. Over $1.5 million but under $6 million in sales requires you to file and pay quarterly.
  5. Over $6 million in sales requires you to file and pay monthly.

You are required to charge and collect GST/HST at the rate that applies to the province in which the taxable goods are delivered to.  An Alberta registrant that delivers a to an Ontario consumer would be required to charge and collect GST/HST at the Ontario rate of 13%.

Selling in BC, Manitoba, Quebec, and Saskatchewan:

If you have more than $10,000 of sales in each “non-participating” provinces ie BC, Manitoba, Quebec, and Saskatchewan, you will need to register for each of those provincial registration numbers individually.  Many clients are not registered in Manitoba or Saskatchewan because their small populations make it hard to surpass $10,000 in annual sales in each province.  For PST you need to enter about 5 numbers into the provinces’ websites to calculate your remittance.  At worst you may need to file BC quarterly and all other provinces annually in addition to the federal GST.

Under $400K of worldwide sales including GST/HST and zero-rated supplies?

If you make supplies in both participating and non-participating provinces, you normally have to use more than one remittance rate. However, special rules apply when 90% or more of the eligible supplies you made in a reporting period were in either a participating province or a non-participating province. These rules are as follows:

  • If 90% or more of the eligible supplies you made through a permanent establishment in a reporting period were made in a participating province (ex Ontario), only use the 8.8% that you would have to use if all eligible supplies were made in Ontario.
  • If 90% or more of the eligible supplies you made through a permanent establishment in a reporting period were made in exampled Alberta, only use the 1.8% rate.

If you are service business the rates are 3.6% in Alberta, and 10.5% in Ontario.

The following persons cannot use the quick method:

  • legal, accounting or actuarial services
  • bookkeeping, financial/tax consulting or tax return preparation services

 

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