Taxes when using US based suppliers and selling to US customers while sitting in Canada

[aurora_ca]

Hi, 

I am a resident of Canada and have an online drop shipping business. I'm using a 3rd party supplier online (print on demand based in the usa and canada). P-O-D fulfillment of the orders depends now wherever the availability of merchandise is, i.e. either usa or canada or somewhere International. They Levy sales tax and other shipping charges from me. 

So my question is- Do I need to charge sales tax if I sell to USA and New Zealand based customers?

Are there any other charges or taxes I need to be aware between usa and canada apart from filling a form regarding income tax on products sold on usa grounds (treaty between canada and usa)?

[Victor]

Hi @aurora_ca,

Thank you for getting in touch. You'll ultimately want to determine what your tax responsibilities are for each country and region you're selling to, as well as any tax obligations you may have in your own country of residence, so it's good that you're being proactive about this. I will be happy to offer some general advice but we would always recommend speaking to a tax professional if you are unsure on anything regarding your tax liabilities.

Whether or not you need to charge and remit sales tax for the US will depend on whether or not you are determined to have a tax nexus in any US states you're selling into. A tax nexus can be based on physical factors, such as having employees, offices or warehouses in a state, as well as economic ones. An economic nexus is generally based on factors such as how many sales you're making into a state, and/ or how much revenue you're making from sales made to customers in a state. If you are deemed to have a tax nexus in a state, then you will likely need to register with the local tax authorities and start charging sales tax to customers you have in the state. I would recommend finding out whether in the US your suppliers are based and look into whether or not using these services would classify you as having a tax nexus in the states in which they are based.

I came across this US taxes guide for Canadian merchants which you may wish to check out.

In terms of New Zealand, merchants in the country are only required to register for sales tax when they earn more than $60,000 NZD in 12 months, as per the government's own documentation. The rules may be different for remote sellers. You can read more about selling into New Zealand from abroad on this third-party blog post.