"If I am selling taxable goods and/or services through a website to people in other provinces, do I have to charge and remit other province's sales taxes?" is one of the most common questions about ecommerce.
This article explains how to handle provincial sales taxes (PST) on your online sales.
We can't talk about provincial sales tax (PST), though, without talking about GST. Generally, if you are selling taxable goods and/or services to people in Canada, you will be charging and remitting GST to the federal government. (You will not charge GST on taxable goods and/or services shipped to people in other countries, such as the U.S.)
Many small business owners are aware that you don't have to charge and remit the GST if you are a small supplier. However, there seems to be a general misconception that the concept of being a small supplier also applies to PST - which is not true. Whether or not you have to register for and collect PST has nothing to do with the size of your business or the volume of your sales. It's just a matter of whether or not you're selling taxable goods and/or services.
Even if you do qualify as a GST small supplier, if you are taking orders from and shipping goods to customers in other provinces, you will want to voluntarily register for GST because of Harmonized Sales Taxes (HST). If you are selling and shipping goods into the HST provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador), you're going to have to collect GST anyhow as it's part of HST. (Here's how to register for the GST.)
So that's three provinces where you will have to collect provincial sales tax, so to speak, as it's part of the HST. You will also definitely have to charge and remit the provincial sales tax (a.k.a. PST, retail sales tax, or RST) in your home province if you are selling taxable goods and/or services. (Because of the complexity of what's taxable and what's not, you should check the PST rules in your province. See PST/RST for a list of provincial websites and information.)
So so far, in terms of taxes on your online sales, you are responsible for collecting and remitting:
- HST for Nova Scotia, New Brunswick, Newfoundland/Labrador
- GST for B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, P.E.I., Northwest Territories, Nunavut, Yukon
- PST/RST for orders shipped to customers in your own province (unless your home province or territory is Alberta, the Northwest Territories, Nunavut or Yukon which have no PST/RST)
But what about the others? The consensus seems to be that the various provincial governments want out-of-province vendors (such as those who run websites and ship things to customers in their provinces) to register for, collect and remit the applicable provincial sales taxes. Some provinces have enshrined this demand in legislation whereas others are just politely asking, pointing out that it would be a convenience to consumers in their provinces.
PST and Out-of-Province-Vendors by Province
In British Columbia out-of-province vendors are expected to collect and remit the province's PST - including vendors selling goods through the Internet, who are specifically mentioned in Out-of-Province Sellers:
"Out of province sellers must register if meet all four of following criteria:In determining whether or not you must register, please note the following.
- solicit sales in British Columbia through advertising or other means,
- accept purchase orders originating in British Columbia,
- sell goods to British Columbia purchasers, and
- cause the goods to be delivered to a location in British Columbia.
- Solicitation can occur by any means including mail, Internet, fax or newspaper advertisement (not a complete list).
- Orders to purchase include telephone, written or e-mail orders from a location in British Columbia, regardless of whether or not the business has an agent in the province.
- Delivery into British Columbia includes goods shipped either physically or electronically by a seller or an agent of the seller.
- Out-of-province sellers are required to hold a valid registration certificate at the time the seller causes the goods to be delivered into the province."
This addendum spells it out for website vendors:
"If you have a website that is accessible from anywhere in the world, you are not soliciting sales in British Columbia. However, if you have a website and also solicit sales in British Columbia by other means, such as promotional flyers or newspaper advertisements, you are soliciting sales in the province."
So it's the active solicitation that determines whether or not you have to charge PST in B.C. even if your business is located elsewhere in Canada and conducted over the Internet, not just the fact that you are conducting business there through your website.
The next page provides more information on the provinces' positions on PST and out-of-province vendors and includes a list showing which taxes need to be collected and remitted for each province. Click to continue reading...
