The Canada GST Tax: Everything You Need To Know In 2022
July 11, 2022 Andrew AdolphAudits
What Is the Canada GST?
On July 1, 2022, Canada required all non-Canadian companies selling to Canadian consumers to be registered for, collect and remit GST.
This blog is for those of you outside Canada and those who are selling into Canada and need more info.
The Canada GST is a tax that is levied on the sale of goods and services in Canada. The tax has actually been around since 1991 and for the first 31 years, its requirements did not extend to companies outside Canada selling to Canadian consumers.
This is all changed recently because of the explosion of e-commerce sales, whether it be goods or subscription services that are beamed into Canada and intended for Canadian consumers.
Good News for Most
The fantastic news is if you sell through a marketplace facilitator, like Amazon, eBay, or Shopify because it will automatically be done for you. Most of these marketplace facilitators are already registered to collect GST and they will collect the tax and remit it for you.
However, there will be thousands of companies that prefer to use their own systems and save on the fees. Depending on how much they sell in Canada, they could be required to register for GST.
If you are required to register, you must collect the GST at the point of sale, and then remit the tax to the Canada Revenue Agency. The tax rate is multiplied by the consideration amount.
Small suppliers are not required to register. A business is a small supplier when its revenues in Canada are less than 30,000$ in the previous four consecutive calendar quarters.
What is the Rate I Must Charge?
This is where things get crazy. The rate you must charge depends upon which province you are shipping the goods to. This is because some of the Canadian provinces have merged their provincial sales tax with the GST, and some of them have maintained their own retail sales tax systems.
Hopefully, you have an accounting program that can handle Canadian sales tax because you are going to need a lesson in Canadian geography if you are doing manual invoices.
Provincial Sales Taxes
Hopefully, you don’t have to be registered and Amazon, Etsy, and Shopify will be handling it for you.
But, if you are required to be registered for the GST in Canada, you may also be required to be registered for provincial sales taxes in those provinces which have a separate provincial tax. So if you have significant sales going to British Columbia, Saskatchewan, Manitoba or Quebec, you may also have obligations there in addition to the federal GST.
The Bottom Line
It is not just Canada. Many of the USA states are now requiring companies who sell to its people to be registered to collect their state sales tax. And they all operate in silos. You have to deal with each state separately.
It can be a little overwhelming.
If you’d like to talk to someone about your sales tax situation and whether you are doing it right, I offer a free consultation by filling out a very quick form. Or you can call me directly if you like, at 604-204-6173, or by email at firstname.lastname@example.org.
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Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.