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Canadian GST/HST Issues for U.S. Sellers: Goods and Services Tax and Harmonized Sales Tax Requirements

Identifying 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

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Conducted on Tuesday, May 25, 2021

Recorded event now available

This course 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

In Canadian provinces, the GST/HST rate varies from 5, 13 or 15 percent. Did you know that different provinces apply different sales taxes at different rates?

  • 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 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 that imposes a federal value-added tax on sales at every stage of a product's life cycle instead of 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 other 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 "carrying on business in Canada" such that the seller must register in Canada to collect and remit GST/HST and other sales taxes. Further complicating matters are special rules particular to non-Canadian e-commerce sellers in Canada. Corporate tax personnel and advisers need to know the Canadian sales tax regime's ins and outs 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 and registration requirements
  3. Special rules for non-Canadian e-commerce sellers effective July 1, 2021
  4. Charging and collecting GST/HST/PST/QST
  5. Input tax credits
  6. Overview of special rules
    1. Import arrangements
    2. Drop shipments
  7. Audit, objection and appeals
  8. Tips and strategies

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 the federal GST regime
  • When does a U.S. company need to register in Canada as a seller of goods or services?

Faculty

Goudy, Bruce
Bruce Goudy, CPA, CMA
Director, Indirect Taxes
BDO Canada

Mr. Goudy has more than 25 years of experience providing advice on indirect tax issues, including assistance with...  |  Read More

Ip, Jonathan
Jonathan Ip, B.Sc., J.D.
Attorney
EY Law

Mr. Ip's practice focuses on advising and representing clients on income tax, GST/HST, and PST matters. His...  |  Read More

Litvin, Brian
Brian Litvin, CPA, CA
Principal
Litvin Muir

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