Canada#amazon# tax# excise# amazon

Recently, many sellers have received notification emails from Amazon about Amazon.ca's tax obligations, making Canadian tax issues a hot topic at once, and many sellers have been asking Green Circle partners about related tax issues.
Sellers are reminded of their Canadian tax obligations, mainly due to the end of the 12-month transition period for the new Mall Tax Collection (MTC) rules announced by the Canada Revenue Agency (CRA), which are now in effect. Amazon reminds sellers to provide a valid GST/HST (federal) registration number to enable Amazon's tax calculation service. In addition, sellers must also provide a valid PST (Provincial) registration number if they want to activate the provincial tax calculation service for British Columbia, Manitoba and Saskatchewan. For Quebec, a valid QST (Quebec) registration number is required.
Relative to other countries, Canada's tax is obviously complicated, so many sellers friends a head of water. Green circle for you to organize the most complete Canadian tax strategy and difficult problem combing, so that everyone can quickly look at the chest.
Canada has a two-tier taxation system, federal, provincial (or territorial) and local, and each province has its own tax legislation. Provincial tax legislation cannot contravene federal tax legislation. Therefore, in Canada, you need to pay GST/HST, PST or QST, so let's learn more about them.

The two main types of Canadian consumption tax
1、Federal Sales Tax GST (Goods and Services Tax) and HST (Harmonized Sales Tax)
GST, a national consumption tax levied by the Government of Canada at a uniform rate of 5%, is a value-added tax levied on most goods and services used for domestic consumption, which is paid by the consumer at the point of consumption, but ultimately paid by the merchant to the government.
The HST, or harmonized sales tax, is a combination of the GST and PST taxes, and is levied by the Federal Tax Administration at a rate of 13% or 15%, but is only applicable in certain provinces: New Brunswick (NB), Newfoundland and Labrador (NL), Nova Scotia (NS), Prince Edward Island (PE), and Ontario (ON).
2. Provincial Sales Tax (PST)
PST is a provincial sales tax. Merchants are responsible for collecting PST from consumers in their home province, which is levied by the provincial government's tax office, and are required to report to the provincial government and pay the appropriate amount of tax. Currently, the PST rate is 71 TP3T in BC and MB and 61 TP3T in SK.
In addition, sales made in Quebec are subject to the Quebec sales tax (QST) at a rate of 9.975% under the Quebec tax code.
What are the provincial consumption tax rates in Canada?
From the above table, it is clear that the rate of excise duty varies from province to province, and the total range is between 5%-15%.

When you need to register your tax code
The Canada Revenue Agency (CRA) has issued a new act for e-commerce platforms and sellers who are non-residents of Canada:
Beginning July 1, 2021, all sellers (regardless of the business's registered address) and e-commerce platforms that ship within Canada and receive goods within Canada will be required to register for the sales tax code GST/HST, depending on whether the sales revenue exceeds the registration threshold of $30,000 for the 12-month period prior to or after this date (2021-July-1);
Effective Date and Submission Deadline for Registration of GST/HST
1. If the registration threshold has been exceeded prior to 2021-7-1, the registration application must become effective on 2021-7-1 and be submitted within 30 days;
2. If the revenue from sales in Canada within 12 months after 2021-7-1 exceeds this registration threshold, it will take effect on the date the threshold threshold is exceeded and the registration will be submitted within 30 days.
take note of
If the registration threshold is not met for voluntary registration of a consumption tax number, it will be at least one year after registration before an application for cancellation of the tax number can be made.
What are the advantages of registering for the Canadian GST?
According to the Canada Revenue Agency's regulations for digital economy enterprises, Amazon implements the withholding of GST/HST+PST sales tax on behalf of sellers who do not have a registered GST/HST+PST sales tax number, is it still necessary for me to register for Canadian GST/HST+PST? Many sellers have this concern.

Let us look at this issue from two perspectives:
1、Sales in Canada are not large, you can just let Amazon withhold and pay GST/HST+PST on your behalf;
2. However, if the sales volume in Canada is relatively large, there are still more benefits of registering a Canadian consumption tax number, as listed below:
  (1) Input Tax Credit (ITC): While applying for GST, sellers can apply for Canada's import and export number, and use Canada's import and export tax number to clear customs, and can offset import GST consumption tax when filing VAT returns; in addition, Amazon's FBA logistics and warehousing GST invoices can also be used for input tax credit.
 (2) Self-declaration of GST/HST: When the seller has his/her own Canadian GST/HST tax number, he/she can collect the consumption tax on behalf of the customer, and then pay the consumption tax offline through the tax agent during the quarterly/annual reporting period, when Amazon no longer withholds and pays on behalf of the customer.
For example, if you are filing an annual return, you can file a tax return by April 30th of the following year. If your estimated net tax for the first fiscal year is less than $3,000 or your estimated annual sales are less than $100,000, you do not need to pay a security deposit when registering your sales tax number and you can file an annual return, which is equivalent to an increase in the tax portion of the cash flow for the seller;
   (3) Sellers have their own Canadian GST/HST tax ID: they can issue their own sales tax invoices, which is more credible for sellers who trade offline.
Therefore, Green Circle suggests sellers to decide whether to register Canada GST/HST according to their own sales situation.
How to Determine the Filing Cycle for Canadian Excise Taxes
The Canadian GST filing cycle, filing and tax payment deadlines are based on the first year's estimated annual sales or the previous year's annual sales, and are categorized into annual, quarterly and monthly filings, with specific requirements as follows:
The deadline for filing and payment of Canadian GST is the last day of the following month for quarterly or monthly returns; annual returns need to be completed by June 15 of the following year, and payment is due by April 30 of the following year, note: the deadline for payment of annual returns is earlier than the filing time.

What is the meaning of paying security deposit to the IRD?
At the time of GST/HST registration in Canada, a security deposit or advance tax payment is required to be provided to the Canada Revenue Agency based on estimated sales. The initial amount of the security deposit is 50% of the estimated net tax for the 12 months following registration, with a minimum of C$5,000 and a maximum of C$1 million. The security deposit can only be paid to the IRS by money order.
However, the following two situations do not require the payment of security deposit to the IRD:

Canadian sales are estimated to be less than C$100,000 per year;

The net tax is less than $3,000 per year.
Do I need to pay the previous tax if I register now?
According to the Canada Revenue Agency's Digital Economy Business
The relevant provisions of the Bill are set out below:

For sellers who sell through a third-party sales platform and whose annual sales in Canada exceeded $30,000 in the 12 months prior to 2021-7-1, they will be required to calculate the taxable sales from 2021-7-1 onwards. If the third-party sales platform has already withheld and paid the sales tax on behalf of the seller, the seller will not be required to pay any additional tax during the period in which the sales tax has already been withheld and paid. Sellers are required to report and pay sales tax from the time they apply for a GST/HST sales tax number and are successfully bonded to a sales platform.
2. For standalone stations and sales platforms, if the annual sales revenue in Canada does not reach the registration threshold ($30,000) by 2021-7-1 or in the following 12 months, or if the threshold is reached and a GST/HST sales tax number is required to be registered, the back taxes will be paid starting from 2021-7-1 or the effective date of the statutory registration.
What are the common penalties for Canadian Excise Tax?
1. Reporting delayed penalties
Any return you file late will be subject to a penalty unless the amount owed is $ 0 or the IRS owes you a refund.
The Inland Revenue Department calculates the penalties as follows:
a) 1% of the amount owed;
b) Calculation result: a 25% of the calculated amount x the number of full months (up to a maximum of 12 months) for which the declaration is overdue.
2. Failure to declare fines
If you receive a request to file a return and fail to do so, you will be charged a penalty of $250. And you cannot claim a deduction for income tax on the penalty paid for not filing a GST/HST return.
Canadian GST Certificate Form
Green circle for seller to register Canada GST/HST tax code, there will be the following 3 numbers applied together:
1, BN number format is BN + 9 digits, such as BN123456789;
2, GST/HST format 9-digit + RT0001.
Such as 123456789RT0001;
3. The format of import and export clearance number is 9-digit + RM0001.
e.g. 123456789RM0001
With the competition in Europe and the United States entering into a white heat and the rapid development of the Internet in the Canadian country in the past few years, according to Statista's data forecast, it is expected that the total turnover of the e-commerce market in Canada will be more than $33 billion by 2024.
That's why a lot of sellers are currently deep in Canada.
Green Circle Firm, and the Canada Revenue Agency has been maintaining close cooperation, is the first batch of domestic can do Canada GST registration firm. There are a large number of successful cases of Canada GST registration, is committed to providing professional and efficient help for sellers and friends who intend to dig gold in the Canadian market. About Canada GST any problem, can communicate.