Sales Tax - actual rules from CRA

Western Metal Inc

Western Metal Inc

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Location
Calgary
We are asked this question every day. We called the CRA and had a long discussion about the laws when we established the webstore, and again yesterday - to make sure the laws haven't changed.
It is not Western Metal Incs desire to be the tax collector but we will follow the letter of the law to keep from being prosecuted. There is no end around from this tax - we are asked by customers "if the customer pays the freight can we show it as being sold in Alberta?" No - that is mentioned in the examples listed in the link below and we would be caught eventually. The fines and penalties are, in most cases, larger than the taxes owing and have been known to put a business into bankruptcy.
Readers Digest version - the taxes have to be paid based upon the tax laws of the province where the products are being shipped. If you want to check on this with CRA call them at 1-800-267-2384.
You can also see examples of this ruling at the following link. Once you are at the link go down the page to "Goods (tangible personal property) - click this option. Then go to "Sale of Goods" click this option. Then go to "see examples for general rules - sale of goods.
The picture below is the same page that the link will take you to after following the directions.
Thank you.

http://www.cra-arc.gc.ca/placeofsupply/

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This applies to HST provinces, if in your example you had a Quebec resident buying from you, you have no obligation, or RIGHT, as a matter a fact, to collect the provincial sales tax, only the Federal taxes.
 
Ok, so other suppliers in Alberta only charge the 5% GST on goods sold to BC, as we reverted to PST a few years back after our short HST experiment. Is this your practice as well?
 
Phat Eagle said:
Ok, so other suppliers in Alberta only charge the 5% GST on goods sold to BC, as we reverted to PST a few years back after our short HST experiment. Is this your practice as well?
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We were directed by the CRA to charge the higher tax to BC residents. Please feel free to call them - not our desire to charge more tax.
 
CRA has no jurisdiction on provincial sales taxes, you misunderstand the meaning of the law. HST provinces get charged HST rate. Other provinces get charged Federal 5% only unless you have place of business in said province, than you need to apply provincial taxes as well.
 
OldFrankHog said:
CRA has no jurisdiction on provincial sales taxes, you misunderstand the meaning of the law. HST provinces get charged HST rate. Other provinces get charged Federal 5% only unless you have place of business in said province, than you need to apply provincial taxes as well.
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In the case of BC we are directed by the Federal Government to collect the 5% GST and remit to the federal government. And we are directed to collect the BC PST and remit to the BC government.
Feel free to call the CRA.
 
I think Western Metal is referring to the following: h*tp://canadabusiness.ca/government/taxes-gst-hst/federal-tax-information/overview-of-charging-and-collecting-sales-tax/#toc1

British Columbia

You are required to register to collect PST if you regularly do all of the following:

Sell taxable goods to customers in BC
Accept purchase orders for taxable goods from customers located in BC
Deliver taxable goods to a location in BC
Solicit persons in BC (through advertising or other means) for orders to purchase taxable goods

However I would argue that if they didn't solicit persons in BC for orders. It should be fine and they don't need to register for BC PST

Clarification is here: ht*p://www.sbr.gov.bc.ca/documents_library/bulletins/pst_001.pdf
Note: If you have only a website that is accessible from anywhere in the world, which
does not target BC, you are not soliciting sales in BC. However, if you have a website and
also solicit sales in BC by other means, such as through targeted Internet advertisements,
promotional flyers or newspaper advertisements, you are soliciting sales in BC.
If you meet these criteria, you must be registered before delivering goods into BC

Is CGN considered targeted? Donno....
 
Western Metal Inc said:
In the case of BC we are directed by the Federal Government to collect the 5% GST and remit to the federal government. And we are directed to collect the BC PST and remit to the BC government.
Feel free to call the CRA.
Click to expand...

That would be correct if you indeed do advertising in BC. I thought you needed a place of business in the province outside HST provinces, but it is only for Quebec. Sorry BC, your screwed :p
 
Western Metal Inc said:
In the case of BC we are directed by the Federal Government to collect the 5% GST and remit to the federal government. And we are directed to collect the BC PST and remit to the BC government.
Feel free to call the CRA.
Click to expand...

The CRA is responsible for the HST and or 5% Federal tax not the provincial tax, I would think that they "suggested" not directed you to collect the provincial tax, there is a difference.:)
 
sushix2 said:
I think Western Metal is referring to the following: h*tp://canadabusiness.ca/government/taxes-gst-hst/federal-tax-information/overview-of-charging-and-collecting-sales-tax/#toc1

British Columbia

You are required to register to collect PST if you regularly do all of the following:

Sell taxable goods to customers in BC
Accept purchase orders for taxable goods from customers located in BC
Deliver taxable goods to a location in BC
Solicit persons in BC (through advertising or other means) for orders to purchase taxable goods

However I would argue that if they didn't solicit persons in BC for orders. It should be fine and they don't need to register for BC PST

Clarification is here: ht*p://www.sbr.gov.bc.ca/documents_library/bulletins/pst_001.pdf
Note: If you have only a website that is accessible from anywhere in the world, which
does not target BC, you are not soliciting sales in BC. However, if you have a website and
also solicit sales in BC by other means, such as through targeted Internet advertisements,
promotional flyers or newspaper advertisements, you are soliciting sales in BC.
If you meet these criteria, you must be registered before delivering goods into BC

Is CGN considered targeted? Donno....
Click to expand...

We considered this when we were setting up the webstore. However - they corrected our consideration and we follow their rules. Please understand - if we come to a different conclusion and they "catch" us not following their rules - we - Western Metal Inc - will be fined and possibly destroyed. We are not going to take that risk - period. Especially over 8%. For the business' that are not following the rules - it is only a matter of time.
 
Waiting for the protestors to start making signs that say "Not my taxes".

I've got to agree fully with Western Metal Inc.
Why would they risk their business and the probability of bankruptcy to save the consumer 8% when they consistently bring us reasonably priced ammo fairly cheaper than retailers can. If you don't like the taxes in your home province, move. That's what I did.
 
Guys, you simply can't blame WM, or any other vendor, for following directions from the CRA. The CRA has the power to utterly destroy a business if they go their own way and fail to collect and remit taxes as directed.

And that's even the case if the vendor fights and is shown to be correct in its practices. If a vendor is sued, the CRA's lawyers don't have to worry about losing or the costs involved. For the vendor, it may be a Pyrrhic victory and nothing more.

EG/ A colleague of mine was involved in a tax law case that went to trial for several months. The outcome of the litigation didn't really matter. The business was annihilated by the costs of litigation. (BTW, I spoke with a person who was on the jury about a year after the case closed. She told me that she never read the binders of documents and barely listened to the witness evidence; she had decided that the business was "guilty as hell" on the first day. Which is a comment on the absurdity of juries in civil matters, IMO...)
 
Tax lawyer here: In Quebec and other non HST, theorically you have to "auto-asses" yourself and pay the portion of the provincial tax in your annual tax return. I don't know anyone who does that.
 
Do you charge tax by billing or shipping address?

Example: Billing address in BC, shipping address in AB. Only 5% GST? Reason for asking: With CP's FlexDelivery, if you live close to a provincial border you can have your parcels directed to a post office on the 'cheaper' side for pickup. If it is indeed cheaper ;)

Or an example of ON and QC. With someone living in Ottawa, it is easy enough to get a FlexDelivery address in Gatineau and only be charged the 5% GST?
 
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jmsamuel said:
Tax lawyer here: In Quebec and other non HST, theorically you have to "auto-asses" yourself and pay the portion of the provincial tax in your annual tax return. I don't know anyone who does that.
Click to expand...

So, in your experience, the common practice by vendors is not to collect/remit such provincial taxes?
(I have certainly noticed this when buying online goods, out of province.)
 
This keeps me buying used gun stuff rather than new unless I can't find it used and I really "need" it. 15% tax on everything helps reduce my consumption. It seems cra must be cracking down. Ten years ago it was easy to get a company to sell you a new gun and only charge the 5%.
 
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