HST & E Commerce

by Judy
(Victoria, BC Canada)

E-Commerce income is treated the same way as traditional commerce income.

E-Commerce income is treated the same way as traditional commerce income.

We are an internet business with a website for folks to order products online, which are then shipped to the client from a warehouse in Canada or a warehouse in the US, depending on what country the order comes from.

Our office is in Victoria, BC.

We do not handle the products, and are not affiliated with the warehouses. We only profit from the markup of the products.

Our clients pay by us through PayPal.

How do we handle/set up the HST/GST and /or PST for Canadian buyers, and what is our tax obligation for US buyers ? Your help is appreciated !!

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Hi Judy,

I just want you to know that I have not been through an audit for an e-Commerce business ... but here is my understanding.

E-commerce income is treated the same way as traditional commerce income.

With the new place of supply rules that came into effect on May 1, 2010, in general, you charge according to the location of your customer.

This means you need to obtain their address ... which I think a CRA auditor may want to verify in an audit ... to assess the correct amount of sales tax.

You will find information on sales outside of Canada by following the link.

Generally, if the customer is not a Canadian resident, then the sales tax is zero rated ... not exempt ... but charged sales tax at the rate of 0%.

If the customer is a Canadian resident, you charge according to their address. Here is a summary table of all the tax rates across Canada. Your tax table in PayPal should be setup and driven by the customer's location.

I'm sorry but I don't know the rules for PST in any province but B.C. ... which we no longer have and hopefully will not have PST in the future. (I hope you will be voting in the upcoming referendum.)

Remember, when making your purchases that you need BOTH a proof of purchase AND a proof of payment to pass an audit.

You can also key in "e-commerce" into any search box on this site and see what else pops up on the subject.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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