You will have to apply for a Business Number with the Canada Revenue Agency (CRA) and register for an Import-Export program account.
You will need to determine whether you are required by the Canadian federal and provincial government agencies to collect sales tax on your sales.
If you conclude that you have to collect sales tax, you will apply to open sales tax numbers accordingly.
Once you have those numbers, you verify the terms and conditions of the online platform you are selling from and provide them with your sales tax numbers, and you start making those sales!
Currently, the threshold to be required by the Canada Revenue Agency (CRA) to collect sales tax on your Canadian sales is when you are making sales of 30,000 CAD worldwide within four consecutive semesters, which do not necessarily need to align with the calendar year.
This means that you could need to start collecting tax in the middle of a given year; it will not necessarily apply as of January 1st of a given year.
It is however not necessary to wait until you are making sales of 30,000 CAD and in some cases when selling through an online platform, the online platform will collect taxes on your sales even if you do not reach the 30,000 CAD limit. Voluntary registration is possible in most cases for non-resident sellers.
Following is the list of agencies with different sales tax requirements and a summary of some of their rules.
|Gov Agency||Sales Tax Code||Rate||Threshold||Required|
|CRA - Canada Revenue Agency||GST/HST||5% - 15%||30k WW Sales Within 4 consecutive semesters or a 12-month period||On every *Taxable items/supply sold, usually to a Canadian within Canada|
|MRQ - Ministère du Revenu du Québec||QST||%9.975%||30k Sales in the province of Quebec within 4 consecutive semesters or a 12-month period||On Every Taxable sale supply to a Quebec resident, even if shipped from outside Quebec|
|Gov of British Columbia||BC PST/RST||%7%||From your first retail sale to a BC Consumer||On Every Taxable retail sale made to BC|
|Gov of Saskatchewan||SK PST/RST||%6%||From your first retail sale to an SK Consumer||On Every Taxable retail sale made to SK|
|Gov of Manitoba||MB PST/RST||%7%||From your first retail sale to an MB Consumer||On Every retail sale made to MB|
Yes, every province has different rules of what is tax-exempt or has a different rate.
While some products are exempt from tax, some are also considered to be zero-rated.
Your seller portal might have special tax codes for all the different products that might have different rates. Click below for a complete list of exempt supplies in each province,
Suppose you have made taxable supplies in Canada, and you have been above the threshold to collect taxes in any of the jurisdictions where you sold. In that case, the government can go back and audit you and charge you the whole amount you should have been collecting plus interest and penalties per their determination.
No. You don’t have to open a new corporate entity in Canada. However, you have to register your existing business with the CRA as an NRI (Non-Resident Importer). You will get a Canadian Business Number and all the necessary Tax Accounts.
No. You do not have to include it. The Canadian Sales tax is collected on top of the sales price and then remitted and paid back to the different government agencies.
Yes. The HST, GST, and QST systems are VAT (Value Added Tax) systems. That means that if you are registered and collect any type of sales tax, you can claim back that tax type if you have any expenses where you had to pay that specific type of tax. This tax claimed back is called an “input tax credit.”
With regards to PST, a mechanism exists that allows PST registrants to be exempt from PST on items purchased for resale under certain conditions, but no input tax credits on purchases are granted contrary to the HST, GST, and QST systems.
It will depend on your sales volume. Every government agency has a different way of determining how often you have to file and pay your taxes. In some cases, a more extended filing period can be obtained if installment payments are made throughout the period. We recommend you consult a tax advisor to get information with regard to your specific situation.
There is nothing to lose when you register! And most of the time, you have a lot to gain…
You could be able to claim back whatever GST you paid. For example, When you are importing into Canada, you pay 5% of the value imported. Under certain circumstances, when you are registered in GST and collecting GST, you could be eligible to claim this GST on imports back.
Additionally, you reduce your risk of being audited and having to pay all those taxes out of your pocket
I’m Jacob Newman, an expert at getting things done efficiently.
And I’m glad to meet you!
After 10 years of helping businesses comply with Canadian tax laws, I have gained a
great deal of insight into the inner workings of the online seller’s world.
The acquired knowledge has helped dozens of companies navigate the complexities of
tax compliance. Through GST refund checks and avoiding penalties or back taxes, they
have saved hundreds of thousands of dollars.
When you entrust my team with your Canadian tax-related business, you can rest
assured that we will be the ones carrying your headaches. You will be left to advance
your business interests and grow your online presence.
P.S. We navigate the complexities so that they always stay simple on your end.