Sales taxes to apply for a Canadian company selling digital subscriptions
Are online subscriptions subject to sales tax?
The “sale of electronic data products such as software, data, digital books (eBooks), mobile applications and digital images is generally not taxable” (though if you provide some sort of physical copy or physical storage medium then the sale is taxable.) (Source: California BOE Publication 109 – “Non Taxable Sales”).
Are digital services taxable in Canada?
The DST would apply at a rate of 3 per cent on certain revenue earned by large businesses from certain digital services reliant on the engagement, data and content contributions of Canadian users, as well as on certain sales or licensing of Canadian user data.
Are subscriptions taxable in Canada?
This is calculated by using a 15 percent applicable tax rate, which is the lowest personal income tax rate that the Canada Revenue Agency applies to non-refundable tax credits. This rate is applies to on all your eligible digital news content subscription expenses up to $500.
Do you have to charge sales tax for online sales Canada?
Currently, there’s no specific set of rules for online sales in Canada. The same rules apply to any transaction. If your business is in Canada, you need to charge sales tax for online sales to customers located in Canada (GST or HST for all online sales, provincial or Quebec sales tax in some cases).
Do you charge tax on digital products?
There are 23 states that do not tax digital products. 4 states do not have a retail sales tax at all; these include: Delaware, Montana, New Hampshire and Oregon. For the states that tax digital products, the tax rate varies from 1% to 7%, depending upon the state and the type of digital good.
Are software subscriptions tax deductible?
If your business requires specific software to operate, you can deduct the software cost or monthly subscription. If you use accounting software like QuickBooks Online or Xero, your monthly fees are deductibles. If you use project management software like Basecamp or Trello, your subscription is deductible.
What are digital services tax?
Digital Service Tax (DST) is a tax charged on income derived or accrued from provisions of services through a digital market place. DST will be charged on the gross transaction value of the service on the payment received as consideration for the service.
Are digital products goods or services?
But what if what you’re selling isn’t a physical product that you ship? Generally, digital products are “intangible” and sent to your customers electronically. These products can include digital books, music, internet TV and streaming media, webinars, subscriptions, software and apps, among many other products.
Is SaaS taxable in Canada?
Electronic services liable to tax throughout Canada include: downloads or streaming of music, games, and other media. software, apps, SaaS or other website subscriptions.
Do you need a business license to sell online in Canada?
No you may not sell, either online or offline, in Canada without a business license from the province where the business is located. If you sell goods or services for financial gain, you need a business license. Most businesses must renew their license every year.
What services are exempt from GST in Canada?
Zero-rated supplies
- basic groceries such as milk, bread, and vegetables.
- agricultural products such as grain, raw wool, and dried tobacco leaves.
- most farm livestock.
- most fishery products such as fish for human consumption.
- prescription drugs and drug-dispensing services.
Do US companies have to pay Canadian GST?
So, when are you obligated to charge federal sales taxes on your orders from the U.S. to Canada? To sum it up, if your e-commerce business is not a small business supplier AND does carry on business in Canada, then you are obligated to register for a federal GST/HST sales tax account.
When should I charge GST on services?
When Should I charge GST? If you are registered for GST and you sell products that are not GST exempt then you must charge GST. However, you only need to charge GST on non-exempt products. If you are not registered for GST, as you are under the $75,000 threshold, you do not have to charge GST.
Do I need to charge GST to foreign clients?
GST is not applied to a service if it is outside Australia and the use of the service is outside Australia. It is also GST free if the recipient of the service is outside of Australia. Exports of goods and services are generally GST-free.
Can you claim GST on overseas subscriptions?
If your business is registered for GST and has been sent an invoice from an Overseas Corporation that has not registered for Australian GST, no GST should be claimed. This organization is not required to send your business a tax invoice. Usually, this invoice is raised in the source currency of the originating country.
Do I need to charge GST to US customers?
If you obtain the GST/HST registration number of your customer who is registered for the GST/HST under the normal GST/HST regime, you are not required to charge and collect the GST/HST on the specified supply that you make to this customer.
Do you have to charge GST on sales to USA from Canada?
As a general rule, goods that are exported outside of Canada and services rendered to non-residents are zero-rated under the GST/HST rules. This means that they’re technically taxable, but at a rate of 0%, you don’t have to charge anything.
Does Google ads charge GST in Canada?
effective July 1st, 2021, GST/HST tax will apply to all Google Ads customers with a billing address in Canada who have not added a GST/HST registration number to their Google Ads payment profiles.
Do I charge tax to US customers from Canada?
If your customers are not in Canada you do not need to charge and remit Canadian sales tax. If your customers are in the US you likely do not need to charge US state sales tax unless you have a “Nexus” (ie. a branch, office or employee) in the US.
Should I charge taxes on Shopify Canada?
Determine whether you need to charge sales tax
If your store is based in Canada, then generally you need to register for a GST/HST account if both of the following are true: You sell or lease taxable products or services.
Do Canadian companies pay sales tax?
Most businesses in Canada have to collect the goods and services tax (GST)/harmonized sales tax (HST) on taxable supplies of property (goods) and services made in Canada, including many supplies of real property, like buildings and land, and intangible personal property, such as intellectual property rights, admissions …
What is the difference between GST and HST in Canada?
Generally, the HST operates the same and has the same tax base as the GST. The GST rate in provinces without an HST is 5%, and the GST/HST combined rates are 15%, except in Ontario where the rate is 13%. The GST/HST is a value-added tax, which operates on an input/output system.
What businesses are GST exempt?
Exempt goods include medical equipment, groceries and exports. If you give lessons, such as how to play the piano or guitar, or you provide childcare, you’re exempt from collecting and remitting GST/HST. The CRA deems any business with $30,000 or less in revenue to be a small supplier.