Canadian VAT Issues for U.S. Sellers: Goods & Services Tax and Harmonized Sales Tax Requirements

What are the Canadian sales tax traps for U.S. businesses?

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

Conducted on Thursday, May 30, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will highlight many areas where U.S. businesses make costly Canadian sales tax mistakes when selling goods and/or services into Canada. The panel will provide useful information to help corporate tax advisers avoid the most common costly mistakes.

Description

The GST/HST rate in some provinces is 15% -- which can be more than the anticipated profit margin on the goods/services. Did you know that different provinces apply different sales taxes at different rates? Did you know that the Canada Revenue Agency sometimes asks for U.S. companies to provide worldwide accounting records (not just transactions related to Canada)? Did you know that the Canada Revenue Agency requires U.S. businesses carrying on business in Canada to register for GST/HST purposes? Did you know that Canada allows registered companies that are engaged in commercial activities to recover GST/HST paid on business inputs? Did you know that how you structure the transaction may impact your ability to recover GST/HST? Do you know the Canadian documentation requirements?

The Canadian sales tax system contains several significant differences from the U.S. regime. Most critically, Canada has a VAT system which imposes a federal sales tax on most sales at varying stages of the transaction as opposed to a single tax paid by the ultimate buyer at the point of retail sale. Additionally, some individual provinces impose a separate provincial-level sales tax; in some cases, those province-level taxes are "harmonized" with the federal GST.

Another challenge facing U.S. companies selling in Canada is the difference in nexus standards between the two countries. Canada relies on a "facts and circumstances" test to determine whether a company's activities constitute "engaging in business in Canada" such that the seller must register in Canada to collect and remit sales taxes. Further complicating matters are special rules particular to non-Canadian e-commerce sellers into Canada. Corporate tax personnel and advisers need to know the ins and outs of the Canadian sales tax regime to avoid costly tax consequences.

Listen as our panel of seasoned tax experts offers a thorough and practical guide to the Canadian VAT system for U.S. companies selling goods and services in Canada.

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Outline

  1. Structure of Canada's federal and province-specific sales tax/VAT system
    1. Goods and services tax (GST)
    2. Harmonized sales tax (HST)
    3. Quebec sales tax (QST)
    4. Other provincial sales taxes (PST)
  2. Nexus rules in Canada
  3. Special rules for non-Canadian e-commerce sellers
  4. Registration requirements
  5. Calculating GST/HST/PST
    1. General calculations
    2. Charging GST/HST on discount sales
  6. Remittance process and input tax credits
  7. Small business exceptions
  8. CRA’s requests for accounting records and audits

Benefits

The panel will discuss these and other relevant topics:

  • How Canada determines nexus for purposes of determining whether a non-Canadian company has sales tax collection and remittance obligations
  • Special rules for U.S. (and other non-Canadian) e-commerce sellers for determining sales tax liability
  • How various provinces' PST interacts with federal GST regime
  • When does a U.S. company need to register in Canada as a seller of goods or services?

Faculty

Cherniak, Cyndee
Cyndee Todgham Cherniak
Founder
LexSage

Ms. Cherniak’s practice is focused on international law and commodity tax (i.e., goods and services tax (GST),...  |  Read More

Litvin, Brian
Brian Litvin
Principal
Litvin Muir

Mr. Litvin specializes in Canadian sales taxes (GST/HST/QST/PST), and international value added taxes (VAT). Mr....  |  Read More

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