How to be sales tax compliant in Canada

When it comes to sales tax, the CRA measures your “year” as the last four quarters. As soon as you surpass the $30,000 mark, you’re no longer a small supplier, starting in that calendar quarter. Chargebee will determine which tax rate is applicable to a particular invoice by matching the address information of the customer with the information you have configured in your CSV file. Lighspeed has implemented a tax class naming convention for Canadian merchants to help you distinguish which tax was charged. When orders are downloaded, the tax class that is assigned to the sale is named in a way that makes it easier for you to recognize tax differences. For example, sales from Ontario will have a tax class called eCom HST (13%) and sales from British Columbia will have the tax class called eCom GST PST (12%).

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

Step 6: Add your tax rates

There’s more to sales tax than just figuring out how much you need to charge. HST is the combination of a province’s sales tax and the GST. Ontario, Nova Scotia, New Brunswick, PEI, and Newfoundland and Labrador use the HST model. If you are doing business in these provinces, you only need to collect one type of tax. Similar to the sales tax system in the U.S., the answer to those questions all depends on location. Canada has a Goods and Service tax (GST) that applies to all purchases made throughout the country.

• You will be charged GST/HST, and PST where applicable, on Stripe fees for SaaS products provided by Stripe.
• This was intended to promote the use of electronic invoices in the country.
• The GST/HST on purchases summary report is a summary report of all sales tax paid on purchases.
• The information on this page will help you understand sales taxes in Canada, but it doesn’t replace any official government information or regulations.
• The information on this report contains actual tax data by Company and Order Type for each Tax Rate/Area.
• To qualify, your business’s worldwide yearly revenue (before expenses) needs to fall below $30,000.
• Any GST or HST is paid by electronic transfer simultaneously to the filing.

However, the zero-rated provisions are subject to numerous conditions. No, GST/HST grouping for registration purposes is generally not permitted. However, special rules may apply for certain qualifying investment plans.

Tax Guide for Businesses with Customers in Canada

Yes, under the GST/HST and QST systems, certain supplies qualify as zero-rated supplies and are taxed at a 0 percent rate, such as basic groceries. Under the GST/HST rules, books and records must generally be stored in Canada. However, non-residents may request authorization to keep records outside of Canada, subject to certain conditions. Generally, businesses must retain books and records for six years after the end of the year to which they relate. However, certain assessments can be issued for up to seven years and may require keeping the related books and records longer.

The process varies depending on where your business is based and where you sell, and on the individual government requirements. The Canadian government levies the GST on sales in Canada of most tangible property and of services. In HST provinces, the HST includes the GST and a provincial portion of tax. This tax is charged as one tax, and isn’t broken into federal and provincial portions.

HST (Harmonized Sales Tax)

Start working smarter, not harder by setting up NetSuite correctly and using its full power. One of the most common requests we get is to be able to see sales tax by province for the provinces that use the PST method. However, businesses Canadian Gst And Pst Tax Reports must also consider various other taxes including QST and PST, which may apply. Also, an unregistered non-resident company may be eligible for a rebate equal to the tax paid for qualifying goods exported outside of Canada.

In British Columbia, 7% PST applies to retail sales and services. If you’re registered to collect GST, then you https://kelleysbookkeeping.com/how-to-file-federal-income-taxes-for-small/ are registered to collect HST too. The difference seems slight, but the amounts must be invoiced correctly.

Five Canadian provinces—Ontario, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and New Brunswick—do not apply GST and PST separately. Instead, they levy a combined tax called harmonized sales tax (HST). Starting June 1, 2023, if your principal place of business is located in British Columbia or Saskatchewan, we will charge PST to your account. This PST is in addition to the 5% GST that will be charged in these provinces.