As an online seller, staying compliant with Canadian tax authorities can be challenging, especially when it comes to sales tax. At Canadian Tax Compliance, we help online sellers from outside of Canada navigate the complexities of GST/HST/PST and ensure they get back as much tax credits as possible. In this blog post, we will highlight 5 common mistakes to avoid when calculating and filing your Canadian sales tax. Not registering for a GST/HST/PST account. In Canada, businesses are required to register for a GST/HST/PST account if they earn more than $30,000 in revenue in a single calendar quarter or in four consecutive calendar quarters. Failure to register can result in penalties and interest charges.
Incorrectly calculating the sales tax rate. The sales tax rate in Canada varies depending on the province or territory where the goods or services are delivered. For example, the rate in Ontario is 13% while the rate in British Columbia is 12%. It’s important to use the correct rate when calculating the sales tax on your transactions. Not charging the right amount of sales tax. As a business, you are required to charge the correct amount of sales tax on your goods or services. This includes any applicable taxes on shipping and handling fees. Failing to charge the right amount can result in penalties and interest charges.
Not properly reporting sales tax on your tax return. When it comes time to file your tax return, it’s important to accurately report the sales tax you’ve collected from your customers. This includes any applicable tax credits for the GST paid on imports or on Canadian expenses. Failing to properly report sales tax can result in penalties and interest charges.
Not keeping proper records. In Canada, businesses are required to keep detailed records of their sales and expenses for at least six years. This includes invoices, receipts, and other documents related to the sale of goods or services. Proper record keeping is essential for accurately calculating and reporting your sales tax.
At Canadian Tax Compliance, we can help you avoid these common mistakes and ensure you stay compliant with Canadian tax authorities. We can register you for a GST/HST/PST account, calculate and file your sales tax, and make sure you get back as much tax credits as possible.