Starting a business in Canada has its challenges, especially for foreigners. If you are considering doing business in Canada as a foreigner, you should know some basics about Canadian business and tax regulations.

Carrying on business in Canada

Canada has a fairly strict definition of what it means to run a business in Canada. In fact, it doesn’t even require a physical presence or permanent establishment, in the country. Online businesses with no physical presence in the country but who provide goods or services to Canadians can be described as carrying on business. There are several factors that go into the definition of “carrying on business,” and it is worth consulting with a Canadian business and tax expert when expanding into Canadian markets.

And, once you carry on business in Canada, the eye of the CRA may be upon you. You will need to be aware of the logistics of Canadian business formation, business income tax, and registering for GST/HST.

This won’t necessarily be an issue for every online seller that sells to Canadians, but it is very important to be aware of it as your Canadian customer base grows.

Income tax

If you are entering Canadian markets from the United States, you may be used to the American income tax system. America has a global income tax, meaning the US taxes your worldwide income. Canada’s income tax is different – it is based on where you earned the money. If you earned the money from Canada, Canada will levy an income tax on it – even if you are not a citizen. As a US citizen and business owner in Canada, you will need to keep careful track of your income from Canadian sources, as well as your total income for US income purposes.

To avoid double taxation, the US and Canada have a tax treaty that allows you to deduct income tax paid in Canada from your US income tax. A tax accountant with experience in international tax can help you find the best tax outcome for your business.

Business formation and registration

To register a business in Canada, you will need to apply for a business number (BN). This applies to nonresident sellers and those with no permanent Canadian establishment as well as resident business owners. Once you have the business number, you will be able to use this number for all your business-government communications. It is also important for other taxes, such as the GST.

In addition to the federal requirements, each Canadian province has its own regulations and tax rates. Some provinces add extra taxes for certain revenues, like credit card surcharges, while others do not. Depending on the nature of your business, the provinces you serve may be something you need to consider. A business consultant or tax accountant with experience in Canadian taxes and regulations can help you decide.

Starting a business anywhere is challenging, but starting a business in a new country comes with its own steep learning curve. Our experts at Canadian Tax Compliance are ready to answer your questions and assist you with company registration. Contact us today.

Guest blog, written by Harmonized Solutions

CBSA announced: ‘You need to take action today.’

CARM Client Portal (CCP)

“All commercial businesses who import goods into Canada need to register to the CARM Client Portal (CCP) before May 2024 to minimize border delays and benefit from the Release Before Payment (RPP) transition period.”

Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM)

“Specifically, all importers who onboard the CCP before the coming-into-force date in May 2024 will be assigned RPP qualifying status for a 180-day transition period allowing them to adapt to this new model, while ensuring that border disruptions are mitigated. Commercial importers will still be able to obtain release before payment of duties and taxes during the transition period as they proceed to meet the requirement for financial security.”

As an importer, what does CARM mean to me?

CARM project has 2 parts that are crucial for importers:

CARM Client Portal (CCP) – this is simply an online portal with login credentials, and your dashboard with the CBSA, where you can review your information and recent transactions (enhanced features and options are planned to be added moving forward).

Canada Border Services Agency (CBSA) Assessment and Revenue Management (CARM) – this is a restructured release and accounting procedure for imports. Becoming the official system of record, importers will need to obtain their own security bond to carry on benefit from Release Prior to Payment (RPP) program. In addition, it will establish a new electronic document for commercial accounting declarations.

The following 2 steps are required by you:

To ensure we can continue to assist in moving your shipments through customs, and prevent you from encountering delays at the border,

• Create your CARM portal – plan approx. 15 minutes.
• Finally, within the portal delegate authority to Harmonized Solutions – Once done, we manage your account!

Our approach – Harmonized Solutions onboarding drive.

With a proactive course, Harmonized Solutions is launching a ‘CARM Client Portal (CCP) onboarding drive’, until the end of the 2023 Calendar year.

• Ask us for your step-by-step instruction package.
• Schedule your personalized 30-minute. meeting
• Questions completing your profile? Have issues validating your business information? email our team of experts at carm@harmonized.solutions

During the next 3 weeks, we’ll be available to guide you through the process, and answer any questions you might have,

Harmonized Solutions is a partner with Canadian Tax Compliance.

Americans in the states along the Canadian border may see the Canadian market as another opportunity to expand their businesses. For US-based online businesses, the Canadian market may seem like an easy way to dip their toes into the waters of international business. But doing business in Canada isn’t as easy as providing goods and services across the bridge. Canada’s federal and provincial layers of government and vastly different tax systems can present a challenge to ambitious but unsuspecting business owners.

In this guide, we’ll look at some of the things to be aware of when expanding your business to Canada.

Corporate taxes

The Canada Revenue Authority will tax the portion of foreign-based income that is related to goods or services provided to Canadians. For example, if you have a Maine-based business, but 25% of your revenue is from your sales in Canada, that quarter of your revenue will be taxed by the CRA.

Canadian corporate tax is divided into two parts: a federal corporate tax rate of around 15% and a provincial tax rate of between 8-16%. Combined with other provincial taxes, the final corporate tax rate for Canadian businesses is around 27-30% of net income. Alberta has the lowest overall taxes, whereas British Columbia and Ontario have higher taxes. Similar to the US, there may be tax credits available for certain industries that can reduce the overall rate.

The US and Canada maintain a tax treaty to avoid double taxation of businesses that conduct operations in both countries. If you plan to conduct business in both countries, it’s worthwhile to consult with a tax advisor. They can help you plan the best business structure for your Canadian business operations.

It is worth noting that while the US allows LLCs to act as a pass-through entity, where the income passes directly to the owner’s personal tax return, Canada does not. In Canada, a US-based LLC would receive exactly the same tax treatment as a standard corporate entity.

Withholding tax for foreign entities doing business in Canada

Certain Canadian income paid to a nonresident owner may also be subject to a withholding tax. This is because the Canadian government wishes to encourage their domestic businesses over foreign investment. Because of tax treaties, the withholding tax for US businesses in Canada can be as low as 5% of passive income derived in Canada, but it can be as high as 25%. This is not applicable to all Canadian income sources, but merely specific passive income such as dividend, interest, and royalty income from Canadian sources.

Sales taxes in Canada

Canada’s sales taxes are different than the US. Like the corporate taxes, the sales tax has both a federal and provincial component. The federal GST is 5% across most industries, and the provincial tax varies between 5-15%. There are some categories of essential goods and services that are exempt from GST, and there are others that, while non-exempt, pay a 0% sales tax. The GST amount is paid by the customer, collected by the business, and remitted to the government.

Nonresidents, including online businesses, doing business in Canada are required to register with the CRA for GST/HST. Sales tax is remitted quarterly or yearly, depending on overall revenue.

Tax treaties with the US

Every bit of Canadian income tax paid by US companies doing business in Canada can be treated as a tax credit for US income tax to avoid double taxation. Since the corporate tax rate is quite similar between the US and Canada, there may be very little overall benefit to paying tax in one country versus another, but it is worth consulting with a tax advisor who can speak to your specific situation.

Canadian business taxes can be complicated, and the penalties for non-compliance are often quite high. If you are considering expanding your US business operations to Canada, it can mean learning an entirely new set of rules and regulations for your business. The experts at Canadian Tax Compliance can help you make this important step. Contact Canadian Tax Compliance to discuss your specific business needs.

References:

https://www.bnncpa.com/resources/doing-business-in-canada-requires-an-understanding-of-their-taxes/

https://ca.usembassy.gov/business/getting-started-canada/

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4027/doing-business-canada-gst-hst-information-non-residents.html

https://mcmillan.ca/wp-content/uploads/2022/04/Doing-Business-in-Canada-2022.pdf

https://www.tmf-group.com/en/news-insights/articles/2023/july/doing-business-in-canada/

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate/calculator.html

What’s the Big Deal about Digital Services Tax?

While Canada and its southern neighbor generally get along quite well, the new Digital Services Tax is about to throw a wrench in the machine. In this article, we’ll examine the proposed tax, why so many are upset about it, and what it could mean for Canada’s future.

What Is the Digital Services Tax?

The DST is a tax on large corporations that provide digital services in Canada. These digital services would include revenue from four sources: social media, online targeted advertising, online marketplace facilitating, and data collection. The tax would be set at 3% of revenue from these sources, but it would not be the company’s entire revenue. Instead, it would only be the revenue attributed to services provided to Canadians. Even with these limitations, the tax is projected to bring in more than $7 billion dollars over a 5-year period.

The DST is scheduled to take effect in January 2024, with taxation retroactive to Jan 2022. It isn’t new: Canada has been discussing it since 2020. They have put off implementation a few times already because of severe disapproval and threats of economic retaliation from the United States. The January 2024 implementation date is considered a final date for the Canadian Revenue Authority, where the tax will either stand or fall.

Origins of the DST

The DST is an outgrowth of an agreement created by the Organization for Economic Co-operation and Development (OECD). This is a group of 37 democratic countries from around the world, who have met to create new ideas about taxation, and global economic equality. Part of the OECD’s plan is to redistribute global tax revenues for large multinational corporations to reflect company activities rather than company location. This plan is known as Pillar One.

This is intended to prevent large global corporations from tax planning and sheltering activities. Up until now, taxation was largely based on a corporation’s physical address location, rather than where they conducted their activities. This leads to companies basing their operations in countries with favorable tax laws, leading to them paying less tax overall. Pillar One aims to capture more of these revenues from corporations that operate around the globe.

The Digital Services Tax is an outgrowth of the ideas of Pillar One. It is based on the idea that Canada can tax services provided to Canadian citizens, even if the company providing those services is not in Canada.

What’s the Big Deal?

Up to ⅓ of the companies that would pay this tax are US-based, and the US does not want to see revenue dollars from US-based companies flowing to foreign governments. Economists also warn that this additional tax may be a burden on these large corporations that leads them to make less money overall or “hide” their profits even more effectively, creating lower tax revenue for all governments.

Canada’s Digital Services Tax is also a model for many other countries in the world. If Canada successfully implements this tax in the face of US disapproval, many other countries may follow suit with similar taxes of their own. This could have far-reaching implications for the corporations themselves and the governments in those companies’ home countries.

Retroactive taxation

In August 2023, the Canada Revenue Agency (CRA) made some changes to the not-yet-effective digital service tax legislation. This change made it easier for companies with tax due in 2024 to calculate their tax due for 2023 and 2022. Instead of performing separate calculations to report 2022 and 2023 tax due, they can use their 2024 tax bill as a baseline to calculate their tax liability for the other two years.

Future Effects

There are a few possible outcomes of the DST. Each has possible implications for all involved parties and for global understandings of democratic taxation.

No DST

This could happen in two ways. The first is that Canada backs down under US pressure, and totally scraps the DST.

The second is that Canada revisits the underlying OECD treaty that is the basis of the DST. If Canada chooses to amend or rewrite part of the OECD treaty as it applies to taxation, it could change how democracies worldwide understand corporate taxation. This could temporarily delay the DST, but it could have other far-reaching economic consequences for other G20 countries in the future.

DST implemented

If Canada does choose to go ahead and implement the DST this coming January, there will undoubtedly be some sort of economic retaliation from the United States. While the tax is calculated to bring in billions of dollars in new revenue for Canada, this does not include any possible negative economic effects against that. If Canada loses revenue due to a trade war with the US, this will of course cut into the increased revenue from the tax.

The DST is the first in what may be an entirely new way democratic governments think about taxation. Anything new causes a great deal of talk and speculation, and the DST is no different. No matter what happens come January, we will be here to assist you with your business and personal tax planning and preparation. Contact us today.

Sources:

https://www.pwc.com/ca/en/services/tax/publications/tax-insights/digital-services-tax-becoming-reality-2023.html

https://www.cbc.ca/news/politics/digital-services-tax-canada-u-s-1.7002703#:~:text=The%20Liberal%20government%20first%20pledged,social%20media%20and%20online%20advertising.

https://taxfoundation.org/blog/canada-digital-services-tax/

https://www.canada.ca/en/department-finance/news/2021/12/digital-services-tax-act.html

Earlier this year, the Canadian Revenue Authority (CRA) made changes to how businesses must record and report credit card transaction fees. Let’s look at the history behind this decision and how it will affect Canadian merchants and business owners going forward.

Origins of the surcharge

Up until recently, it was illegal for Canadian business owners to charge their customers transaction fees for credit card usage. Credit card companies charge between 1-3% on the cost of each transaction. Under the old regulations, these fees were absorbed by the business, increasing their expenses and reducing profits. As of October 2022, because of a lawsuit between Visa, Mastercard, and a collection of Canadian businesses, Canadian businesses are now allowed to pass these charges, up to 2.4% of the transaction cost, on to their customers. Quebec is the exception: consumer protection laws prohibit merchants from charging credit card fees to consumers there.

Surcharges as extra revenue

Because of this change, businesses began collecting a small amount of extra revenue: the purchase amount from the sale, plus the credit card fee from customers who paid with credit. Of course, with a potential new revenue source, the CRA wanted to know: are those credit card processing fees subject to GST/HST?

Canadian Imperial Bank of Commerce vs the Queen, 2021

This question ended up as a lawsuit between the Canadian government and the revenue authority: Canadian Imperial Bank of Commerce vs the Queen, 2021. The CRA wanted the right to tax credit card surcharges, but they lost the case.

The end ruling of the case is that credit card surcharges are not part of a business’ revenue. They are a payment for a separate service that the business is offering to its customers: the privilege, or convenience, of paying with a credit card. This means that these surcharge payments fall under financial service payments, which are exempt from GST/HST.

Changing definitions

Here is where the 2023 changes come in: the Canadian Revenue Authority wanted to change the definition of financial services to exclude credit card surcharge revenue, making these payments eligible for GST/HST.

This was done by creating a special exception in the Excise Tax Act. Because of this change, all credit card surcharges paid on or after March 29, 2023 are now subject to GST/HST.

Other forms of financing charges, such as one-time financing charges on sales paid in installments, are still exempt from GST.

Going forward

What does this mean? While 2.4% may not seem like an enormous amount of money on any given transaction, let’s look at some of the implications for this budget change.

Suppose a customer puts a $100 purchase on a credit card at a business that includes surcharges. This brings the total purchase amount to $102.40. Assuming a 5% GST, the tax on the surcharge portion of the transaction would be an additional $0.14 – in addition to any GST on the $100 purchase itself. In provinces like Ontario with a higher HST rate, these amounts would be even higher. It is clear why the CRA wants to capitalize on this revenue source – it is estimated that this change will add $195 million to the Canadian national budget.

Businesses that include these credit card surcharges are now required to report and remit GST/HST on these transactions. Any businesses that owe GST on these transactions will be issued an invoice.

For further information or more guidance, you can contact the Canada Revenue Authority or speak with one of our tax experts.

References

Application of the GST/HST to Credit Card Surcharges – Canada.ca

What You Need to Know About Canada’s New Credit Card Fee – NerdWallet.

https://www.freshbooks.com/blog/credit-card-surcharge-canada

Tax Insights: 2023 Federal budget ─ GST/HST and financial institutions | PwC Canada

Demystifying GST: A Guide for Online Businesses in Canada

Introduction:

Welcome, online sellers, to a captivating exploration of tax compliance in Canada! Throughout this chapter, we’ll explore the Goods and Services Tax (GST) and its significance for foreign vendors entering the Canadian internet market. Join me as we demystify the GST and its impact on your business. So, buckle up, and let’s start our voyage in tax compliance!

We embark on a thrilling journey into the heart of tax compliance in beautiful Canada. The intriguing Goods and Services Tax (GST), frequently misunderstood, is our first stop. Don’t worry; as your intrepid guide, I’ll transform this potentially dull subject into an exciting journey that will leave you wanting more.

So, what is this unidentified beast known as GST?

Consider it the vessel ensuring safe passage through the sea of Canadian tax requirements. Most goods and services sold in Canada, both domestically produced and imported, are subject to this value-added tax. But hold on tight; this tax is distinct from any you’ve encountered. As a destination-based tax, it is assessed based on where goods or services are consumed, not where they are produced.

“Why should I care about this tax?” you might ask. Well, GST becomes a crucial compass to navigate the perilous waters of tax compliance in the Canadian online marketplace. Failure to comprehend and abide by GST requirements can lead to trouble, fines, audits, and erosion of customer trust.

Imagine yourself as a merchant sailing the Great White North on your virtual ship, selling exquisite items to eager consumers. The GST tide fluctuates as your products travel through digital waves, ready to receive your cargo.

Timing is everything with GST. If your annual sales to Canadian customers reach a specific amount (currently $30,000 CAD), you must register for and collect GST. Reaching this milestone signifies your business’s growth. Plus, filing for GST has benefits, allowing you to claim tax credits on GST paid for company purchases, giving you a well-deserved tax break.

Now, things heat up. If your company is based outside Canada, you may qualify for the GST/HST (Harmonized Sales Tax) for Non-Resident Businesses program. This program simplifies collecting and remitting GST/HST, preventing you from drowning in paperwork. Whether you’re a business owner from London or California, set sail into Canada’s vast online economy with confidence.

However, GST is not a universal tax. Each Canadian province implements it differently, known as the Provincial Sales Tax (PST) or Quebec Sales Tax (QST). These regional variations further complicate the already intricate web of tax responsibilities. Navigate these provincial taxes carefully to avoid pitfalls.

Mastering the subtleties of GST is essential for your success in the fascinating world of Canadian tax compliance. The next chapter will delve deeper into Canadian sales taxes, so stay tuned. Get ready; the journey has just begun!

Navigating the Canadian Sales Tax Maze

Introduction:

Welcome, online business owners! Prepare for an educational journey through the complex world of Canadian sales taxes. In this chapter, we’ll explore additional tax responsibilities that you, as an online seller, should be aware of alongside the GST. Understanding these regulations will help you navigate the tax compliance route and avoid traps. Hold on tight as we navigate the Canadian sales tax waters together!

You might wonder, “What other sales taxes await us on this adventure?” As we explore the vast Canadian market, we encounter various sales taxes, each with its own personality. While the GST is crucial, it’s not the only force shaping the fiscal waters. Join us as we delve into the intricacies of these tax responsibilities and uncover their mysterious nature.

Let’s start with the provincial sales tax (PST), a submerged reef waiting to challenge unsuspecting businesspeople. Provinces like British Columbia, Manitoba, and Saskatchewan impose the PST, demanding your attention and precise calculations, even after mastering the GST.

Each province has distinct regulations, exclusions, and criteria to navigate. For example, British Columbia bases the PST on the cost of goods, while Manitoba applies it to both goods and specific services. To ensure a smooth journey, we must adapt and familiarize ourselves with the unique requirements of each province.

Now, let’s set our compass towards Quebec, where we encounter the mysterious Quebec Sales Tax (QST). Ah, mon amis, the QST adds its own flavor to the tax brew, tempting businesspeople in this French-speaking province. Quebec has combined aspects of the GST and provincial tax, creating its own sales tax formula. Prepare to navigate the challenging waters of both the QST and the GST when venturing into Quebec.

But wait, there’s more! The Harmonized Sales Tax (HST) is imposed in the maritime provinces of New Brunswick, Newfoundland and Labrador, and Nova Scotia. Here, the GST and provincial sales tax have merged, forming a harmonious tax landscape. Ah, the sweet sound of harmony! These provinces have streamlined tax collection through the HST, facilitating trade across their borders.

As our ship sails west, we encounter the stunning province of Alberta, where no provincial sales tax hides in the shadows. Yes, you heard it right. Alberta stands out as a haven of tax simplification. Ah, a break from the turbulent world of tax compliance for weary seafarers.

But our journey through Canadian sales taxes isn’t over. As we traverse the vast Canadian terrain, more taxes and levies may await us. Hidden islands in the form of environmental fees, customs tariffs, and industry-related levies might pose unexpected challenges.

Armed with this knowledge, we will overcome these tax challenges. So, keep your hands on the wheel as we navigate the hazardous waters of Canadian sales taxes.

In the next exciting chapter, we’ll explore the buried riches and potential pitfalls of imports. Get ready for the journey to continue!

Navigating Import Pitfalls: Ensuring Compliance for Canadian Market Success

Introduction:

In this chapter, we’ll explore the dangers of incomplete import filings in Canada. Failing to file properly can result in financial losses and legal complications. But fear not! I’ll be your guide to understanding the consequences of incorrect imports and how to navigate these challenges. Prepare to protect your earnings as we delve into the art of import compliance!

Picture this: You’re a daring trader sailing toward the Canadian borders with valuable cargo. Beware of the treacherous waters of import procedures and customs regulations. Navigating these risks poorly can lead to financial loss and legal trouble, leaving you stranded at sea.

The first danger is duty and tax evasion, a hidden reef that threatens to derail your expedition. While avoiding fees may seem tempting, it can have severe consequences. Customs officials are vigilant in spotting incorrect forms, ensuring no treasure escapes taxation. The result? Lost sales and a damaged reputation.

But it doesn’t end there. Inadequate import filings can cause supply chain delays and disruptions. Your ship may be stuck at a customs port, awaiting clearance due to incomplete or incorrect paperwork. The lost time translates to lost money and permanent damage to your bottom line.

Let’s not forget the intricate web of regulatory compliance surrounding imports. Each step must be followed diligently, from product safety regulations to prohibited components. Ignoring these factors risks costly recalls, hefty penalties, and harm to your business reputation. Adhering to the rules ensures your products meet Canadian authorities’ stringent specifications.

Consider yourself fortunate to have me as your guide on this journey! I’ll steer you toward import compliance, safeguarding your treasures. Master the art of meticulous paperwork, proper classification, and open communication with customs officers to navigate these turbulent seas. Invest in the necessary skills and knowledge, whether through internal resources or reputable customs brokers, to sail to success.

Remember, the costs of poorly filed imports extend beyond financial loss. Your reputation suffers, customer trust dwindles, and your supply chain harmony is disrupted. By embracing import compliance, you set sail for prosperity and establish yourself as a trusted trader in the thriving Canadian market.

Prepare for the voyage ahead, ensuring wealth and compliance. Together, we’ll navigate import filings, paying attention to every detail. Fellow explorers, let’s venture into the realm of import compliance!

Navigating Tax Compliance for Online Sellers in Canada

Introduction:

In this chapter, we’ll guide foreign online vendors through the tax compliance waters of the Canadian online market. Discover the essential actions and strategies for success in the ever-changing tax landscape. Prepare for smooth sailing and sustainable growth in the vast e-commerce ocean. So, hoist the anchor and join us on this educational journey!

As we embark on this chapter, we reach a crucial point in our voyage through tax compliance. Here, amidst changing regulations and shifting tides, we’ll become master navigators of the e-commerce world. Brace yourself for an engaging story of triumph, where tax compliance adds the magic of adventure.

Picture this: You, a daring entrepreneur, command the Canadian online market from the helm of your digital ship. The winds of opportunity propel you towards untapped potential. But beware of hidden dangers and unpredictable currents. Fear not; tax compliance is your compass to stay on course.

You may wonder, “How can tax compliance be captivating?” Let me show you a place where tax compliance symbolizes professionalism and strength. It becomes a guiding light that ensures smooth sailing, protecting your vessel and crew from legal and financial challenges, just like the North Star guides mariners through the night.

Join us on a fantastic adventure to uncover the secrets of successful tax compliance. The first treasure is understanding the intricate web of tax laws surrounding your online business. It’s like deciphering an ancient map, revealing hidden passages to compliance. Filing taxes, understanding procedures, and maintaining accurate records are your compass to safe harbors.

But that’s not all! Relationships and professional advice are crucial as we venture further. Working with tax experts is akin to having a skilled first mate navigating through audits and regulatory scrutiny. Their expertise and experience help you sail through the challenges of tax compliance.

Tax compliance offers more than just legal safety; it’s a competitive advantage. Imagine your company as a magnificent ship sailing the Canadian online market. By being tax compliant, you demonstrate ethics and professionalism, earning the trust of customers and partners. Strengthen your brand and outpace those who dare to navigate non-compliance.

The crown jewel is the world of advantages unlocked by paying your taxes. Diligently meeting tax requirements allows you to claim input tax credits, balancing your payments and enhancing cash flow. This empowers you to invest in your company’s growth and development. A rich prize awaits those who choose the path of compliance.

As we conclude this chapter, remember the importance of tax compliance. It’s a powerful tool to navigate the e-commerce industry, not a burden to bear. Embrace it as your journey to credibility, profitability, and long-term success.

Lift the anchor, fellow entrepreneurs, and let tax compliance guide you to a prosperous future. Together, we’ll sail the waters of tax responsibilities and emerge as rulers of the e-commerce ocean. With the knowledge and fortitude to navigate tax compliance, we sail toward new horizons.

Simplifying Tax Compliance for Online Sellers: Ease and Excellence

Introduction:

Embark on an extraordinary journey through tax compliance, where simplicity reigns supreme. Our expert team is dedicated to your success in the Canadian online market. Experience the ease of using our services, navigating complex tax waters, and receiving unparalleled customer assistance. Get ready for an amazing journey filled with advantages!

Easy-to-Use Services

We understand your busy schedule as an online business owner. Our tax and importation professionals are here to help. From setting up tax accounts to obtaining necessary licenses, we streamline the process and integrate it seamlessly into your e-commerce platform. Say goodbye to fines and unpaid taxes. We make online selling in Canada stress-free and rewarding.

Transparent Pricing

We provide clarity in the sea of pricing schemes. Our straightforward pricing structure eliminates uncertainty and surprises. Focus on expanding your business while we handle the complexities of the Canadian tax system. Sail with confidence, knowing your journey will be simple and financially stable.

Superior Customer Service

Our cherished clients are our priority. Enjoy excellent customer service that responds quickly and attentively to your inquiries. Our qualified staff is experienced in Canadian tax laws, ensuring no question goes unanswered. Sail with confidence, knowing we’re here to guide you through shifting waves of compliance.

Free Assistance and Advice

We’re dedicated to your success. Beyond being a service provider, we’re your ally and business partner. We offer free counsel and support to navigate tax compliance challenges. Trust us to provide the resources and personalized help you need to overcome obstacles and achieve your goals.

Contact Information and Procedures

We value effective communication. Reach us easily through email welcome@canadiantaxcompliance.com, instant messaging, or phone calls. We promptly respond and establish a cooperative connection, ensuring you’re never lost in the sea of compliance.

Conclusion:

Online sellers, our journey through tax compliance has been exciting. Trust in our straightforward services, affordable prices, and top-notch customer support. We’re here to guide you through the complexities and help you sail to success in the online marketplace. With CTC by your side, easy sailing awaits.

Canadian Tax Compliance offers Amazon sellers referred to us by their Amazon Rep an exclusive tax compliance services offer, easing the expansion process for Amazon sellers who are eager to expand into new markets and be fully tax compliant.

Who We Are.

We are a team who minds YOUR business and take the weight of tax compliance off your shoulders so that you can focus your energy where it won’t get drained.

As a trusted provider of tax compliance services, we have been entrusted by online sellers worldwide to handle their tax-related needs.

What We Offer

As an Amazon seller expanding globally, It can be daunting to navigate the complexity of foreign tax compliance, we take that weight off your shoulder and manage the complexity of becoming and staying tax compliant in Canada.

Our services include:

• Tax accounts setup: We facilitate a seamless importation experience by setting up your federal and provincial tax accounts.
• Tax compliance: We ensure you remain tax compliant in Canada, keeping you informed and worry-free.
• Filing and submitting your taxes: We meticulously prepare and submit all necessary documentation.
• Reporting and record keeping: We keep detailed records of all your transactions for future reference.
• Maximizing your GST refund: We make the necessary calculations to ensure you can deduct the taxes you paid at the importing stage from your tax remittance. Your paid GST gets refunded in the form of a deduction.

Exclusive Amazon partnership Offer

As part of our exclusive offer for Amazon.ca sellers referred to us by Amazon, we are glad to offer the following:

• 50% off the setup fee – a savings of 250 CAD!
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Book a Meeting with Us

We’d love to connect and discuss how our services can help your business. To schedule a meeting, please reach us at welcome@canadiantaxcompliance.com or call us at 1 (877) 360-4987.

As we enter the second half of 2023, sellers in British Columbia and Saskatchewan will have to make slight changes in how they record and remit provincial sales tax.

These changes are provincial only and do not affect the general sales tax throughout Canada.

Online marketplace fees

Effective July 1 2023, online marketplace facilitators in British Columbia will be required to remit slightly more PST. Why more? Before July 1, they were only required to collect and remit PST on taxable items and services rendered to marketplace sellers. Now, they will be required to collect and remit PST on all online marketplace services rendered.

Please note that marketplace facilitators are different from marketplace sellers. For example, if you sell items on eBay, you are a seller on the eBay marketplace and do not have to consider GST/PST at all. However, under this change, the parent company eBay must change how it collects and remits PST in its British Columbia division.

This change applies both to sales tax on items sold through the marketplace and services provided by the marketplace facilitator. To continue our eBay example, eBay would not only have to charge sales tax on the item being sold but also on the other services eBay provides as well. These would include transaction facilitation services such as:

• Advertising
• Listing services
• Collecting and remitting payments
• Customer service
• Managing returns and refunds

Since these services all fall under Canada’s definition of taxable services, they must be included in PST calculations.

Place of Supply changes

Canadian GST follows the “place of supply” principle to determine what sales tax is applicable. This means that sales tax follows the place the good or service was originated, and not necessarily where it was sold to.

The new British Columbia PST rules also changed to align their online marketplace PST rules with the federal GST rules. Previously, goods purchased outside British Columbia via an online marketplace and shipped into the province for commercial use were subject to PST. Since this violates the “place of supply” principle, these goods are no longer subject to PST.

Medical equipment

There are some minor changes regarding medical equipment and PST.

• In British Columbia, automatic external defibrillators were added to the list of items exempt from PST. This includes their accessories, such as extra pads, wires, and repair or servicing for these machines.
• In Saskatchewan, labour and materials to repair or service exempt medical equipment is now also exempt from PST.

Other changes

Saskatchewan also made a few retroactive changes to its PST regulations to ensure consistent applications of the GST/PST laws.

• Commercially grown produce: storage containers and buildings for commercially grown produce are exempt from PST, retroactive to April 1 2019.
• Rice farming: Boats with attached harvesting equipment for rice farming are exempt from PST, retroactive to April 1 2019
• Geothermal drilling: Rigs and equipment used for commercial geothermal drilling are exempt from PST, retroactive to April 1 2017.

References:

PST changes for online marketplace facilitators in July – KPMG Canada

EY Tax Alert 2023 no 15 – Saskatchewan budget 2023-24 | EY Canada

EY Tax Alert 2023 no 07 – British Columbia 2023–24 budget | EY Canada

Tax Information Updates | Provincial Taxes, Policies and Bulletins | Government of Saskatchewan

Updates to sales taxes – Province of British Columbia (gov.bc.ca)

As we approach the launch of the second phase of CARM, it is important that you understand the benefits of this new initiative and how it will affect you.

What is CARM?

CARM is a program that has been rolled out over the past few years by the Canadian government to help improve the efficiency of importing goods into Canada.

CARM, an acronym for CBSA Assessment and Revenue Management, is a user-friendly digital platform that will help the Canada Border Service Agency (CBSA) collect duties and taxes for anything imported into Canada.

Who is an importer?

An importer is anyone, whether an individual person or a company, that brings goods into Canada from another country intending to sell those goods and therefore is responsible for paying duties and taxes on those items.

Categories of importers include:

• A Resident Importer (RI): A business or person who lives in Canada but buys goods from another country to sell within Canadian borders.
• A Non-Resident Importer (NRI): A business or person who lives outside of Canada buts ships products into the country to be sold.

Both of these types of importers are required to pay duties and taxes on their imported goods.

Why is CARM being implemented?

CARM is being implemented to help simplify and modernize the way CBSA monitors imported goods and manages revenue.

Streamlining the importing process is meant to encourage importers to bring their goods into Canada, which is crucial for the economy.

The goals of CARM are:

• Provide user-friendly online tools to help classify imported goods and calculate the duty and taxes.
• Make the process of working with CBSA easy and accessible for importers.
• View up-to-date account information and make payments online.
• Improve importer’s compliance with trade rules.
• Improve consistency with trade rules.

The phase of the CARM releases

CARM is being rolled out in two phases, release 1 and release 2.

Release 1 was implemented in May 2021, and release 2 has had a few release dates but is now said to finalize in the fall of 2023.

Release 1 allows importers to do the following online:

• Calculate the duty and taxes on their imports.
• Pay duty and taxes online.
• Classify goods.
• View their transactions and online account statements.
• Request a ruling if necessary.
• A chatbot to help users if needed.

Release 2 will expand the functions of CARM to include:

• All trade partners will be able to enroll their businesses and participate in the program.
• The ability to adjust or correct the Electronic Commercial Accounting Declarations (CAD).
• CAD will replace B3 and B2 custom coding forms. Making all of your history easy to find in one document.
• Options for duty and taxes billing cycles and new payment options.
• Importers can have their shipments released before payment through the Released Prior to Payment (RPP) Program.
• Business number registration will be required for imports through the CARM Client Portal (CCP).

CARM Client Portal (CCP)

At release 2, anyone who brings commercial goods into Canada must have a CCP in order to continue importing. Setting up an account is simple and will ensure there is no interruption to your business.

Here is a step-by-step when setting up your CCP

1. Delegate key users. Identifying the key users of the portal before setting it up will help later down the line when you are in the CCP and need to delegate user roles. Accounting, executives, and anyone related to customs activities should be considered people to have access to the portal.
2. Create a CARM Client Portal. Head over to the Government of Canada website to set up your account.

You can sign up with a sign-in partner. This option lets you create an account with all the information you already have on file with the sign-in partner. Generally, it is an online banking account that is used as a sign-in partner. None of your banking information will be shared, not even which sign-in partner is being used, but it is used to verify who you are.

If you don’t want to use one of the sign-in partners, you can register for a GCKey user ID and password. You may already have a GCKey through your CRA account, but creating a new one for your CCP through the portal would be a good idea so you don’t confuse your personal accounts with business accounts.

3. Designate a Business Account Manager (BAM). The final step in setting up your CCP is designating a BAM.

A couple of things to consider when deciding whom to designate as the BAM to your account are:

• The person who is registered as the BAM will be given the highest level of control over your account and any other accounts linked to it.
• The BAM will need the legal information to link to your portal, such as GST information.
• Consider assigning a secondary BAM just in case you have a change in your employees; you don’t want to lose access to your CPP.

Benefits of CARM

The benefits of using CARM are meant to streamline the overall process of importing into Canada and make it so easy that importers want to bring their products here with a no-fuss, no-muss importing system.

A couple of key benefits include:

• Make the overall importing process into Canada simple and user-friendly.
• Modernize the interface used for importing.
• Cut down on the cost of importing.
• Improve compliance with trade rules.
• Provide importers with a fast way to access their information.

Conclusion

Importing is an essential part of Canada’s economy, so implementing a system that makes the process easy to understand and use is beneficial to the people importing and the economy overall.

Customs related questions? Consult with experts in International Trade law, our partners at Harmonized Solutions

Client support – CBSA Assessment and Revenue Management

CARM_R1_User Guide_Onboarding to the CARM Client Portal

Information_Sheet-Registering_a_Business_on_the_CARM_Client_Portal_October_2022

CARM_R1_User Guide_Delegation of Authority

CARM_R1_User Guide_Financial Information and Payments-0723

CARM R1 Playbook _ENG October

CARM_R1_User Guide_Managing Rulings

As an Amazon seller, you could be missing out on a chunk of cash if you aren’t filing for FBA refunds. Some sellers are not aware they are eligible for FBA refunds, while others do not fully understand the process.

You probably already know that Amazon is a master of logistics, and most of the time, this helps your FBA business run well. However, this titan of the industry can still make errors, and sometimes this ends up hurting your bottom line. 

When Amazon makes a mistake that costs you money, this is called a discrepancy. This includes damaged or destroyed stock, as well as fee overcharges. In these situations, you are often entitled to an FBA refund, but your time to make the claim is limited. Once the deadline to file has passed, your money will not be refunded.

If this is the first time you are hearing about FBA refunds, don’t be intimidated. With a little help, you could be reunited with your cash. 

Let’s get started.

What are the FBA refund categories?

You might be wondering which scenarios merit an FBA refund, and here we’ll look at five of the main FBA refund types. If you wish to ensure that you do not leave any money on the table, you can seek the services of a company such as GETIDA where the entire FBA refund process is handled for you. We’ll talk more about this later.

First things first: the five major areas of loss for FBA sellers are:

• Damaged stock
• Lost stock
• Amazon fee overcharges
• Returned stock

Let’s take a closer look at each of these situations.

1. Damaged stock

    

   You probably have no trouble imagining how inventory might become damaged in a large Amazon fulfillment center. However, damage can also occur when your products are in the care of Amazon’s shippers.
   In your seller central account, you’ll be able to view details of any damaged items in the “Damaged Inventory Report.” Whenever a product is damaged on its way to the Amazon warehouse, in the Amazon warehouse, or en route to the customer, this report should note the damage. This report also includes records of any products that have gone missing from the fulfillment center in the last 30 days.

    

2. Lost stock

    

   Sooner or later every Amazon seller has the disappointing experience of their inventory getting lost. This can be discouraging, especially after you have taken great care in selecting, sourcing, and promoting your products.
   Products can get lost when shipped to the Amazon fulfillment center, or while in the warehouse. This could be due to inventory being added to another seller’s account, or a mishandling of barcodes.
   Thankfully, a record of losses over the past 18 months is documented in Amazon’s inventory reconciliation reports. GETIDA can be especially helpful in this situation with its expertise in seller account auditing. You might be able to skip the tedious task of going through a year and a half of data in order to get your FBA refund.

3. Amazon fee overcharges
   

   Fees are an inevitable part of life for an FBA seller, but that doesn’t mean you should be overcharged. Amazon might accidentally charge you incorrect fees on shipping or storage, and when this occurs, you can file for an FBA refund.

   For example, if Amazon uses inaccurate measurements or weights to calculate your shipping fees, you might receive several overcharges as that item is shipped. When filing for an FBA refund in this situation, you take care to provide the correct product dimensions and weight so that Amazon can correct the product details.

4. Returned stock

    

   Customer returns are another regular occurrence for FBA sellers, but when part of the process is not managed properly by Amazon, you should claim an FBA refund. In order to find out if your account has any returns-based discrepancies, you’ll need to complete an audit of your data.

   You might find that a customer returned the wrong item, and Amazon accepted it, or that an item was returned in a damaged state. In some situations, customers are refunded more money than they paid, or they are issued a refund, but never sent the item back.

   In each of these cases, you could file a claim for an FBA refund. The amount of money you could be owed in this category might surprise you.

How will you manage your FBA refunds?

You might be starting to look forward to seeing your FBA refunds flow in, but first, you need to decide how you will approach filing your claims. It is important to consider the needs of your business as you choose the option that fits best. Let’s take a look at some options:

1. Claim independently:

    

   You might opt to learn how to file your FBA refund claims yourself, especially if you are just starting out. Keep in mind that the process of auditing your seller account can be time-consuming and any gaps in your knowledge of the process could mean missing out on cash. As an entrepreneur, your time is a resource to your business, and there might be other areas of your FBA enterprise that require your personal touch more urgently.

    

2. Enlist a virtual assistant (VA):

    

   Growing FBA businesses make delegation a necessity, and you may already be using the services of a VA for some tasks. When outsourcing your FBA refund claims to a VA, remember that their level of experience could directly impact your bottom line, and if they miss any potential refunds, you’ll never be seeing that money again. Any VA must be trustworthy, but this is especially true for those who file your FBA refund claims as they will have access to your account details.

    

3. GETIDA’s FBA reimbursement solution:

    

   There are a number of companies that specialize in FBA refund management, but GETIDA stands apart with unparalleled levels of service and experience in the field.

   GETIDA stands for Get Intelligent Data, and they use state-of-the-art software to thoroughly audit your transaction data for the last 18 months. This ensures any discrepancies are found, and you won’t miss opportunities for an FBA refund.

   Once the discrepancies have been located, GETIDA gets to work filing your claims. This includes any necessary messaging with Amazon regarding the claims. GETIDA’s claims department consists of former Amazon FBA reimbursement employees who know how to communicate effectively with seller support. Thanks to this experienced team, the amount of money refunded to you is maximized when you use GETIDA.

Going forward with your FBA refunds

With this new foundation of FBA refund knowledge, you are ready to begin getting your cash back. Amazon’s errors should not hurt your business, and there’s no reason to leave your money on the table.

There is a range of discrepancies that merit an FBA refund and a number of ways you can approach filing your claims. If you think enlisting a specialist is right for you, you can sign up with GETIDA and receive a free estimate of your potential FBA refund. You might have more cash waiting for you than you think. So, what are you waiting for? Get your free estimate today.