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Canadian Taxes and Import Duties - Need Help!


max_plus
Full Member
  • Posts: 7
  • Joined: 20 Feb 11
  • Karma:
21 Feb 11 12:18:28 am
I have recently been searching for information on keeping my web site legal with little success and am looking for some help. I am a Canadian citizen living and operating in Canada and want to start up a website. I want to sell and ship worldwide, but am concerned with collecting Taxes and import duties.

Question (1)Am I required to collect taxes from anyone?
(2) Can I sell to Canadians and not collect taxes on Canadian sales? (Note* I am Canadian)
(3)Do I have to get a Tax ID?
(4)Does it matter where I drop ship from?
(5) Should I just put on my web site that the customer is responsible for paying any import duties? And Does that exempt me from collecting taxes?

If you could provide me with any answers to any of the following questions your response would be greatly appreciated.

Thank you
Max_Plus






richelle_salehoo1
Site Admin
  • Posts: 5231
  • Joined: 20 Oct 08
  • Karma:
21 Feb 11 09:53:11 pm
Hi Max_Plus,

I'm no tax expert :) But I will try my best to answer your questions based on what I read from Link hidden: Login to view and Link hidden: Login to view -

(1)Am I required to collect taxes from anyone?

Yes, you are required to collect taxes so long as you are a registered business and have a GST(Good and Services tax) or an HST (Harmonized Sales Tax - combination of GST and PST or Provincial Sales Tax; HST applies if you are living in Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario and B.C.)

(2) Can I sell to Canadians and not collect taxes on Canadian sales?
(Note* I am Canadian)

Being a Canadian, by law you are required to collect taxes, although the rates may differ depending on your current location and that of your customers.

(3)Do I have to get a Tax ID?

For you to collect taxes, you should. Also, if you have registered for a GST you'll be able to recover some of the GST you paid out on business purchases back through Input Tax Credits.

(4)Does it matter where I drop ship from?

If you are concerned about border taxes/fees, yes it matters. No matter where you bought the products and in what currency, the value of the goods must be converted into Canadian dollars to determine the duties payable. Please note that some goods will also have other charges or taxes applied.

(5) Should I just put on my web site that the customer is responsible for paying any import duties? And Does that exempt me from collecting taxes?

Ideally you should and the situation should exempt you from collecting any tax since your customer will be paying it especially for dropshipped items, but here's what I read from Link hidden: Login to view

How do I make sure the end customer isn’t charged the Canadian sales taxes (GST for Canada, PST for BC) twice, while still allowing the company to ship to them directly?

The answer is: you can’t. Not legally, anyway. By law, if I sell something to someone who lives in Canada, I have to collect the GST (and PST if they live in BC). When the item comes across the border into Canada, if it’s shipped directly to the customer, they have to pay it again. Legally I can’t not collect it on the grounds that they will pay it, and legally they can’t not pay it on the grounds that I already collected it from them. I could engage a customs broker to do this, but they’re far too expensive for me to contemplate at this stage. The only legal way for the customer to avoid paying the taxes twice is if I have the item shipped to me, and then I ship it on to them. Which increases the cost of shipping, increases the delivery time, and negates much of the point of drop shipping.


For more tips and professional guidance, it would be best that you seek advice from a local accountant or a customs broker perhaps.

Hope this helps.


Richelle

Customer Support Manager
SaleHoo Group Limited
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