Financing, tax rates, and accounting
I'm in the USA, I want to sell to Canda customers but I've been getting email from Shopify saying I may be charging them too much. It was set us using Shopify'sautomatic rates. So for know I've stopped selling to Canada.
Can any of you U.S based shops tell me what I need to be charging for Canada, each provadince? do I only charge VAT? I can't find clear rates or instructions anywhere. Thanks.
You shouldn't be charging tax to Canadian customers at all unless you are registered wth the relevant authorities - which is not usually the case for US-based businesses. Normally, you don't charge the tax, and then the courier company or postal system collects it when the package arrives. Nonetheless it is possible for a foreign business to register and collect Canadian taxes. It may be a lot of work and I think you're probably better off not bothering. Doing it makes things nicer for your customers, but almost nobody else in the USA does it. And you are certainly not legally required to do it if your business is not based in Canada.
The amount of the tax depends on the province or territory of the buyer. If you're going to collect Canadian sales taxes, you have to register for the Canadian federal tax ("GST") with the federal government first, and that applies everywhere in Canada, but then you also have to deal with things per-province.
* Ontario and the Atlantic provinces: these provinces are part of the "harmonized" system and instead of charging GST you charge HST, which combines the two levels of tax into a single percentage. You pay the tax to the federal government and they split out their share and the province's share. The rate varies per province.
* Alberta and the Northern provinces and territories: these places have no provincial or territorial sales tax; you only charge the federal GST.
* British Columbia and Manitoba: you are required to register separately with the provincial governments and charge their taxes as well as the federal one.
* Saskatchewan: you are not required but encouraged to register as with British Columbia and Manitoba; you charge the federal tax in any case, but the provincial one if and only if you registered for it. If you don't register for the provincial tax, your customers are supposed to self-assess it and pay it directly to the government themselves.
* Quebec: the federal and provincial government Web sites say different things about Quebec, and the provincial authorities whom I talked to seemed unable to comprehend the idea that someone would ever be selling to customers in Quebec without having the business physically based in Quebec. It appears that it is not necessary for out-of-province (let alone out-of-country) vendors to register and collect the provincial tax, and that (as with Saskatchewan in the non-registered case) customers located in Quebec are supposed to handle it themselves.
Of course I am not a tax lawyer and this is not legal advice.
Thanks for the info, I do not want to charge tax to canada or go through all the work just to do it if I don't have too. I was under the impression that I would have to charge tax cause Shopify is located in Canada.
I'll try Canada again 🙂
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