For Sale .ca sales and the GST

[domainatrix]

When selling to parties outside Canada, whether it be a good or a service, CDN businesses are not permitted to charge GST; whether your revenue is above or below $30K you do not have to remit GST to Revenue Canada for sales outside Canada. In short, they won't come after you as long as you have paperwork to show the sale was made outside Canada!

 

[DNGeeks]

If you don't collect you don't pay, however you still need to file your reports.

You can only charge GST to buyers who give a Canadian address. So buyers from the US would be exempt of course and no GST is charged or collected.

You can charge Canadian funds to a US seller and you still don't have to charge GST. GST is only charged when the buyer is listed as being in Canada.

 

[TheLegendaryJP]

That is what I assumed, waiting for accountant to call back as well. That's good news, feel like I made eeerrr saved $XXXXX today Only 10% of my gross was from within Canada so I was looking at a HUGE GST number. I wonder if there is a form/section indicating my gross/net and why the GST payment only reflects 10% lol

 

[DNGeeks]

If I remember right, on the form you only indicate gross sales that apply to GST.

Don't forget you can call them and ask these questions without identifying yourself. That way you can get the info right from them and be 100% safe in your knowledge that you're doing things the right way.

Don't forget that you can apply for the GST Input Tax Credit (ITC) and get back any GST that you paid for your business as well. And yes, in some cases you can get more GST back than you collected from customers and it's perfectly legal and acceptable to them.

 

[TheLegendaryJP]

Thanks DNGeek, I am aware of the ITC but sadly ( for me lol ) my expenses ( GST ) does little to counter the total GST on my gross. This little law I was unaware of as it never applied in the past or I was never informed of it has saved me money. I can sleep sweeter tonight

 

[DNGeeks]

One more thing that you may not be aware of but you can apply for the ITC for up to 2 years back if I remember correctly. Contact revenue canada to confirm this though.

This can include your home computer, taxes paid on internet access, domains purchased from Canadian registrars, your home purchase if you use a percentage of that as a home office (yes that could be big bucks), a vehicle if you use it for business etc.

Of course talk to a tax attourney or accountant before claiming the big buck stuff as you want to make sure you're doing everything legally.

 

[DropWizard.com]

That way you can get the info right from them and be 100% safe in your knowledge that you're doing things the right way.

Let me tell you about a little study done some years ago. A bunch of tax experts phoned rev can with various tax questions. Over 60% were answered incorrectly.

The only answer I accept comes from my accountant cause I can sue the **&*&^* if he's wrong.

 

[TheLegendaryJP]

I am a Realtor so I do maximize my net/phone/car/food/gas expenses at tax time. Obviously we charge GST so I pay GST and have gotten ITC each year but the real issue was paying GST on all these sales to out of country buyers. As for write offs for my domain biz, I want to be as honest as I can be, net/phone/office space etc all good but car is pushing it, gas is also imo. I travel from home to the bank lol Better pay a little more and sleep good at night, jmo when I do anyhting. Thanks for the tips though this will be a useful thread for Canadian domainers !

 

[Jacksplat]

If you are a Canadian and sale only to individuals outside Canada , therefore not charging GST ( eventhough your income is in excess of $30k and you do have a GST number ) do you still have to pay the GST to Revenue Canada ?

If you don't collect GST then you don't pay it. Even if you were supposed to collect it.

What does Rev. Can say ?

The CRA wants to know if your making money out of country. This is a grey area. No matter how much it is, they still want to know about it. The only way to successfully make money offshore and not pay tax or declare is to have absolutely no paper trail, even digital.

 

[TheLegendaryJP]

If you don't collect GST then you don't pay it. Even if you were supposed to collect it.

I am not so sure this is true if I sale goods or service on non exempt items in Canada or to a resident/citizen then I have to pay GST . Not collecting it was I thought short changing myself . Now we deal in an industry where Canadian or not I do not tack on gst or any other sales tax. The fact I do not does not mean I am exempt myself, so I believe. Simply not collecting equating to not owing revolves around whom the buyer is and what country the sale took place. So I have been told.

 

[dcsun]

I've always played it safe when it comes to the Canada Revenue Agency. But the way the GST system is set up, if you're running a legitimate business (unless it's one with high revenues and very low expenses, and please let me know so I can get in on that!) you're crazy not to start collecting/charging GST. You get your 6% (5% soon) back on all business purchases, and as an added bonus your business looks more professional to your customers. You can register as a sole proprietor without much hassle at all, and it really doesn't take that much time or effort to keep it all straight. Also, if you're anywhere near the mandatory cutoff ($30,000 in sales for the previous 12 months), it pays to get everything set up before you get to that number, otherwise you'll end up paying the GST on some of your sales out of your pocket!

 

[ianccc]

GST only aplies to selling to a Canadain within Canada

your okay

 

[dcsun]

GST only aplies to selling to a Canadain within Canada

your okay

While it's true that GST only applies to sales occurring within Canada, that doesn't waive the requirement to register for a GST account if your sales are over $30,000.

From the CRA Website:
"Should you register for a GST/HST account?

You have to register for GST/HST if you ceased to be a small supplier (your worldwide taxable supplies and sales, including those of all of your associates, exceed $30,000 in a single calendar quarter or in four consecutive calendar quarters)."

 

[TheLegendaryJP]

While it's true that GST only applies to sales occurring within Canada, that doesn't waive the requirement to register for a GST account if your sales are over $30,000.

From the CRA Website:
"Should you register for a GST/HST account?

You have to register for GST/HST if you ceased to be a small supplier (your worldwide taxable supplies and sales, including those of all of your associates, exceed $30,000 in a single calendar quarter or in four consecutive calendar quarters)."

True you need to register but you do not have to collect on domain sales, in fact you can't to non citizens outside Canada sales or for intellectual property. My tax guy got back to me and stated clearly 3 very simple principles as to why I will not/do not have to collect or pay GST as my sales are to NON canadians and even if within Canada they are deemed intell. property and GST exempt. Bottom line sure register over $30k but you cannot collect, will not pay and do not therefore qualify for a GST credit. Fine no credit, so what I didnt pay GST on vrtually anything associated with my domain biz any ways. Besides internet/some gas and office it equates to very little.

 

[ianccc]

JP Quote: My sales in Canada they are deemed intell. property and GST exempt.

This is a shocker to me - I brought up the point of domains being intelectual property and SHOULD be exempt simular to the housing market.

http://www.dnforum.com/f356/ca-accounting-principals-thread-242249.html

I will inquire on my end but that seems strange advice

 

[dcsun]

Domains are intellectual property? That's a new one! There are a small number of businesses who can't register and collect because of the services they provide (there's a list on the CRA website -- I don't see anything resembling a domain name there, or anything resembling intellectual property either for that matter).

You can look at a domain as a membership, a subscription, a license, all sorts of different things, but they're all taxable. You pay GST when you register or transfer a .ca domain name, and even in the TBR auction process.

The bottom line for me is that the client pays the tax (and if they're a business they don't care because they just get it back and pass it through to their client), and you save money by collecting it, so it just makes sense to do it.

I have a family member who was running a successful business with a number of employees, who thought their services were not taxable, but the CRA disagreed. They owed the feds an amount in the six figures and ended up losing their house and most of the business over it.

 

[TheLegendaryJP]

I am just saying what my accountant told me and he spent his time on it. Perhaps his back up is outside Canada sales, non citizen buyers etc. All I know is any sale outside Canada is GST exempt. That account for 99% of my business, in fact I think I have 2 sales inside Canada and do not mind paying GST eventhough I didnt collect it. Here is his exact message via email..

Hi Joshua,

It our understanding that domain names are intellectual properties which are exempt from GST. In which case you do not pay GST on the purchase of the names or collect GST on the sales of the names. Since you are engaged in selling an exempt item, you would not be able to claim any GST input tax credits on your other expenses paid.

Chris

Keep in mind he is referring to the purchase from the former owner and not the registrar. Like I said I know my out of country sales are and to me that was the most important fact. Exempt or not because of being deemed intellectual property wasnt saving me anything any ways. My inside Canada sales earned me less than $30K any ways. I hope there is a box when filing to explain all this lol

 

[revolution1]

a little off topic but can domain sales be qualified for capital gains exemption???

 

[dcsun]

I hope there is a box when filing to explain all this lol

I can picture it now... "If you need more space attach a separate sheet to this form" :lol:

I agree 100% that anything sold outside of Canada does not require GST to be charged, or "zero-rated" as the CRA calls it. And as you say, if you're definitely going to be under $30,000 in total sales for the year you're fine not registering.

The intellectual property argument is very interesting to me, because I've never heard that mentioned as GST exempt before. It's not listed anywhere on the CRA's list of GST exempt items. I personally would have some serious concerns about my accountant telling me something that's contrary to the government's published information. The other thing that's interesting here is that intellectual property would 99.9% of the time be purchased by a registered business, so they wouldn't care if it's GST exempt or not because they get it back anyways.

 

[TheLegendaryJP]

I agree it threw me for a little loop too and it seems to go against the CRA statements but when looking closer the CRA actually contradicts itself when explain what is and is not " intellectual property " . On one hand they say it isnt X then when looking for a definitiopn of X they call it intellectual property. Like you said in the end I am fine as sales inside Can. under $30k, I do have a number regardless though