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If you have clients in Canada, regardless of where you live or where your online business is situated, you must follow Canadian GST/HST legislation. That is the goal of this guide! Whether your clients are in Montreal or Toronto, this book will teach you all you need to know about Canadian federal tax regulations.
Let's start with what you're trying to sell in Canada. Do you provide digital products for purchase?
These are items or services that the client downloads via the Internet, receives via email, or gains access to by visiting a website.
● E-books, photographs, movies, and videos purchased directly from Shopify or through a streaming provider such as Netflix. For tax reasons, these goods are classed as "audio, visual, or audio-visual items."
● Music that may be downloaded as MP3s or listened to on services like SoundCloud or Spotify. Naturally, these items are also under the audio category.
● Websites, Internet service providers, and website hosting services Online advertising and affiliate marketing Under digital tax legislation, income from these services may be considered taxable.
GST/HST rates for digital goods in Canada
The federal GST/HST consumption tax is levied on almost all purchases in Canada. To be tax compliant, you must closely adhere to the digital item criteria.
You must charge a 5% GST on any digital items you sell to Canadian clients. Isn't it simple?
No, it does not. It is more difficult because most Canadian provinces have their own municipal taxes, which are handled in two ways.
1. the complete sum
The Harmonized Sales Tax combines federal and provincial taxes levied in five provinces (HST). GST, which is outlined in this manual, simplifies the HST procedure.
2. the one-of-a-kind additional
This is referred to as the PST, the Manitoba Retail Sales Tax, or the Québec Sales Tax (QST). It has many registration and filing procedures.
In Canada, you must register for the GST/HST.
Is there a registration sale minimum?
Yes, internet sellers in Canada must pay an annual registration fee of $30,000 Canadian (CAD).
What exactly does this mean?
The threshold amount is then based on your total domestic sales over any 12-month period. Any rolling 12-month period, past or present, can be utilised to compute historical sales or forecast future sales.
The registration procedure
In Canada, it appears that you must register for taxes. Don't be concerned! Simply follow the processes outlined by the Canadian tax administration to register for Canadian GST/HST.
Finally, you will be assigned a GST/HST registration number, which will identify you as a genuine business in the Canadian tax system. This number tracks your company's activity throughout the system, including taxes paid, tax breaks obtained, and taxes charged to clients.
Filing GST/HST Returns in Canada
Compliance entails more than simply assessing and collecting taxes. The second, and equally important, part is filing forms and paying any taxes owed.
Foreign corporations operating in Canada are obliged to file quarterly tax filings. You need to submit and pay in one month of the end of every reporting period.