We have two levels of sales tax--GST at 7% which is a federal tax and must
be collected by the merchant and submitted to the feds directly via a
special remission process, which includes detailed reporting. There are
certain goods that are GST exempt (food for one). Certain businesses are GST
exempt (mostly government services), but I don't know all the exemptions.
GST reports must be remitted bases on whatever reporting period the business
has opted for, or in some cases, the reporting periods are enforced. Usually
it's quarterly, some are annual, some do it monthly--depends on volume in
part. In some cases services provided for minors are tax exempt (e.g.,
swimming classes for kids under 14). It isn't all that straightforward--so
you'll need to know the nature of the goods or services being sold, and the
audience it is sold to.
In addition to that we have sales tax in most provinces--each province has a
separate rate. This tax must be submitted to the appropriate provincial
governments and is separate and distinct from the GST. Each province has
their own set of rules--again certain goods are exempt. Also, if you reside
in a tax exempt province (as I do in Alberta) and buy goods in a province
that has sales tax where you plan to use the goods in the province of your
residence (eg. I buy a car in BC but reside in tax-exempt Alberta and will
use it here), you can be exempt. I'm not sure if that's the case in all
provinces, but it is in BC. Once again, each province is regulated
differerent.
Jason talks about a brokerage fee--his explanation is a bit unclear. But it
sounds like what is happening is that the client he is referring to uses a
broker to clear imported goods, and that percentage fee is a service fee
paid to the broker--this isn't a tax issue, this is a business decision.
Brokers typically remit duty and GST for you and that is included in their
invoice, along with their service charge. In order to clear the goods and
have them released, they remit all taxes including GST and duty to the feds
(Receiver General) and then collect from their client. This is an issue most
ecomm sites wouldn't have to go near. Depending on the size of the business,
they might want to talk to a logistics specialist at a customs broker to
make sure they have a proper workflow in place.
I don't have a clue what happens to tax when you sell to the US from Canada.
Note that this is a very cursory explanation, and much more detail would be
needed.
I do know our banks here aren't particularly keen on ecommerce, especially
with physical goods, and they have been known to impose very high security
deposits to cover possible chargebacks. I looked into this for a furniture
company, and they were told they would have to put up the equivalent of 3
months sales for VISA--which would have been hundreds of thousands of
dollars. Interestingly, American Express required no deposit.
But this is far from the issue of CF---if anyone has any questions they feel
I might be able to help with, please feel free to email me. My knowledge is
only that of a Canadian citizen who buys stuff--not as a developer who has
looked into it in detail. But I'll certainly help if I can
fwiw,
Dawn
Matt -
I just actually dissassembled a canada shipping/ tax piece on one of my
clients sites I built.
Basically here are the elements -
1) Broker Fee / Customs and all that - Typically a broker fee is
involved - a percentage based fee. Includes a standard federal percetn
fee too I believe. If not broker- then I guess jsut the federal - my
clients used a Broker to eliminate this guessing.
2) Province tax - as much as 15% in Newfoundland
3) Exchange Rate
4) Your shipping rates - flat rate or carrier
We applied tax pre-shipping cost - yet the broker fee I beleive needed
to be on complete purchase.
Hope this little bit helps. Feel free to email me off list if you wnat
further details.
jay miller
P.S. THe rates i have for province are as follows ( please confirm them)
ProvinceProvAbrTaxRate
AlbertaAB7
British ColumbiaBC14
ManitobaMB14
New BrunswickNB15
NewfoundlandNF15
Northwest TerritoriesNT7
Nova ScotiaNS15
NunavutNT7
OntarioON15
Prince Edward IslandPE7
QuebecPQ16
SaskatchewanSK13
YukonYT7
Matthew Fusfield wrote:
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