Canada GST from 1 June 2021

[das_bends]

Hi all, starting 1 June 2021 there's GST on "digital sales" :

[cpacanada.ca...]

I received this email from Google :

To comply with local laws in Canada, starting Jul 1, 2021, we will begin adding GST/HST to all transactions unless you provide your GST/HST Registration Number in Canada.

Does anybody have a better understanding of this?

[JorgeV]

Hello,

Are you living in Canada?

Are you living outside of Canada, and selling goods and services to Canadian's customers?

[JorgeV]

Addendum : also do you use paid services from Google?

[NickMNS]

I am Canadian, and worse still, I live in Quebec, as a business I have to deal with GST/QST (QST is the Quebec equivalent of HST, we do everything different). Let me just say that the system as it is now is overly complicated and total waste of time and resources. These proposed changes are going to make it all the more complicated.

Essentially the way the system works now is that each Canadian business acts as a tax collector for the government. One is required to collect or pay tax on every transaction, whether or not the tax is applicable to you. Then after some period, one takes the collected tax revenue and nets against your actual tax obligation and either pays or receives a refund from the government. So effectively business are providing tax collections services as well as financing for the government.

This proposed change to law is expanding this to foreign companies. The biggest problem I see is that companies will now be able to demand collection of taxes to Canadian residents and businesses, but how will Canadian government be able to collect from these foreign companies. In other words, company xyz say pay me 15% tax, Canadian consumer says yes, then Canadian government says to xyz pay me my taxes, to which xyz says I'm not Canadian, so sue me.

[JorgeV]

Hello,

In the EU, this is businesses which are collecting the VAT for the Governments. And, not only for "your" government. You have to collect the VAT for the Government of the country where your client is (if the client is an individual person). So, for example, a Spanish business, selling something to a Germany individual, has to apply and collect the German VAT , and pay this VAT to Germany.

There are 27 countries in the EU (I don't know if UK is still in the EU VAT thing), and of course, each country has a different VAT, so you can see the complexity of the system.

[lammert]

Welcome in the modern world Canadians :)

GST/HST type taxing is already common practice in Europe. As a EU company you have to collect taxes when you are selling to private citizens in all EU states, and in a number of countries outside the EU.

In eCommerce transactions with private citizens between the UK and the EU, for example, the selling company needs to collect VAT if the value of the goods is below a threshold of about EUR 150. For higher transaction values it is the responsibility of the buyer to pay the taxes. The same method applies for transactions between Norway and the EU.

Intangible goods have their own special set of tax rules. If you have a sizable amount of cross-border eCommerce transactions in Europe, you quickly have a dozen or so VAT registration numbers and pay taxes in all those individual countries, in- and outside the EU.

The times that cross-border eCommerce transactions went below the radar of the tax-collector are long gone.

[JS_Harris]

NickMNS, I feel for you, and you have to file two tax reports every year, a provincial and a federal I believe.

Do the changes even affect adsense earnings? I think what might trip up some adsense users in Canada is whether or not they signed up as an individual or as a business. You can't change the type of account you have. It never mattered before but it might now come tax time.

I'd expect they'll make entering a tax ID number mandatory for business accounts moving forward too. What a pain for small publishers not conducting any business.

[NickMNS]

Do the changes even affect adsense earnings?

Actually there is no GST or QST to collect on Adsense earnings since Google is a US company. The proposed changes apply to foreign companies selling to Canadians. Not Canadian companies selling to foreign companies. It will be foreign companies that will need to collect the taxes and pay them back to our government.

As to whether you are business or individual, it doesn't really make a difference, after some threshold of applicable sales you are obliged to collect the tax. But, the system is such that it is beneficial to apply for a tax number whether you are obliged to or not, because you get a tax credit for taxes paid on business expenses. So for example this year I have not collected any taxes (no Canadian sales), but will be able to get a credit for GST/QST paid on my expenses, so the government should be sending me money back and the end of the year. Mind you it wont be much, as most of my expense are from US companies. Maybe at some point these vendors will start charging me GST/QST, who knows. It's just more paper work...