As an online seller, it’s crucial to stay compliant with Canadian tax authorities, especially when it comes to sales tax. Failing to register, calculate, and file your sales tax (GST/HST/PST) correctly can result in penalties, interest charges, and even legal action. But beyond the potential consequences, there are several reasons why sales tax compliance is important for the success of your business in Canada.
First and foremost, sales tax compliance is a legal requirement in Canada. The Canadian government takes tax compliance very seriously, and non-compliance can result in significant penalties. In addition to potential fines, failing to comply with Canadian sales tax laws can damage your reputation and put your business at risk.
Sales tax compliance is also important for maintaining a level playing field with your competitors. If you’re not charging and collecting the correct amount of sales tax, you may be giving yourself an unfair advantage over other businesses that are following the rules. This can lead to resentment from your competitors and, in some cases, legal action.
In addition to these practical reasons, sales tax compliance can also benefit your business financially. By registering for GST/HST/PST and properly calculating and filing your sales tax, you can ensure that you’re only paying the tax that you owe. This can help you avoid overpayment and ensure that you’re taking advantage of any available tax credits for the GST that you paid on imports or other Canadian expenses.