Valuable Revenue Canada advice for Canadian sellers ...

[TrueColours]

Went and picked up my paperwork from my accountant today and long story short, he said that I owed Revenue Canada some ghastly amount in hst (our 13% pst and gst (goods and services tax) on my last 2 tax years and I said “NO WAY! Rev Canada owes ME for the last 2 years - I just finished doing everything!”

What it boiled down to was that he took all of my sales - product revenue, stud fee revenue and horse sales revenue to Canadian and Non Canadian buyers and assessed the hst owing on the whole lot. I told him that for any NON Canadian buyers, I have never charged the 13% hst and he said that if I got audited, I would be in trouble based on the courses he had taken

So … on the way home, I phoned up Revenue Canada and got hold of a Senior Officer for the hst division and heres the scoop - it was all news to me …

I sell a product called Bossys Bibs that I bring in from the UK and I sell it within North American. If I sell to Canadians, I of course charge hst but if I sell to Americans - I dont.

As proof that the Bossy Bib I sold to Bill Black in Buffalo, NY actually left Canada, I have my invoice that accompanied the product and my sales receipt from Canada Post showing that I did - indeed - take it to the Post Office and send it on its way to the USA

However - if Bill Black showed up at my door with his passport in hand and said “Sell me a Bossy Bib and dont charge me hst” I have lost care, custody and control of that product BEFORE it leaves Canada and I dont know if Bill will, in fact, take it to the States or if he will drop it off at my neighbour instead and they get a BB without having to pay hst on it

On to semen shipments … same rules apply … when I tender it to FedEx, I have kept care, custody and control of it, I have filled out the waybill, and instructed FedEx to send it out of Canada. It doesnt matter if I pay the shipping or the client does - I have maintained control of that “product” until I have ensured that it is going to be leaving Canada

If Bill Black showed up at my doorstep, showed me his passport and said he is driving back to Buffalo tonight and wants to take his semen shipment with him - again - legally I HAVE to charge him hst and I dont know if he is lying or if he really will leave the country with it …

On to horse sales - same rules apply. If I sell a horse to Bill, I MUST make the shipping arrangements for it and instruct the shipping company that this horse MUST leave Canada. Its fine if Bill then pays the shipping invoice, but he cannot make the arrangements - I must do that. I am then turning over care, custody and control of that Canadian horse to a 3rd party that I contracted and the corresponding paperwork (Export Health papers, Coggins and shippers Bill of Lading) will then confirm that if I am audited, I have done everything correctly and will pass all Revenue Canada scrutiny.

So - if Bill says that since he is only 60-90 minutes away from our farm and he wants to come and pick up his new horse himself, I legally HAVE to charge him the hst

There is recourse for him to get the hst back (which takes about 6 months) once he files the necessary paperwork proving that the horse crossed the border with him but most people find it to be a PITA and dont bother and Revenue Canada basically gets some free revenue from those that cant be bothered to do so

This was an absolute wake up call for me - I know now what has to be done and how my invoices need to read to make sure I am 100% in the clear on any and all sales of any “product”

My “Public Service Announcement” for the day …

[Bravestrom]

it is indeed a pain and ridiculous.

I was audited by revenue canada for my business (not horse related) because I was getting refunds and my sales did not match the hst reported. They did not believe my customers were in the US and that I shipped to them in the us.

So I was audited - 4 years - they had a ton of paperwork to go through and did not find one thing wrong - 3 days it took

I was also commended - because in some instances some customers want me to ship to a US location but bill on a canadian Credit card - HST must then be charged.

Also note - that if you sell a horse to someone in NB or NS or NFL and you arrange the shipping - you have to charge 15% - BC - 12% - other provinces 5% fyi.

[Daventry]

So glad we do not have HST in Alberta! :yes:

[rodawn]

That all makes sense for US customers and sales.

But, did you check on what happens with Revenue Canada if you sell semen to someone in a province that does NOT have HST?? i.e. Alberta.

If you make the shipping arrangements for semen to be sent to Alberta, do you still have to charge HST?? It was my understanding that only residents of BC or Ontario had to pay HST on semen and other provinces just GST.

[kokoda]

Everyone is looking for more ways to produce income … can hardly wait for someone in the US to say “isn’t that a great idea?!” :no: Paperwork for taxes, no matter the country is a PITA!

Thanks for sharing … I will pass this along to my Canadian friends!

[TrueColours]

But, did you check on what happens with Revenue Canada if you sell semen to someone in a province that does NOT have HST?? i.e. Alberta.

If I sell any “product” to Alberta, I only charge the 5% gst since hst doesnt apply for that province

[bloomingtonfarm]

I don’t take anything for granted with Revenue Canada unless I have it in writing. And I usually call two or three times to see if I get the same info, and most of the time it’s not. Or if I insist they sometimes verify more carefully (asking the agent next desk) and come to a different answer…:yes:

I am not saying this information is wrong, but I know how some agents understand and apply the regulations.

So the best thing is to ask them where did they get this info and to send you a copy of this. They have the obligation to give it to you so at least they do a better research.

Sometime it could be an internal decisions that could be challenged.

I know because I have worked 30 years for the gov.

[Hiddenacresmi]

here’s an idea… Canadians… buy your foals from USA (dollar very weak against Canadian dollar)…raise them, break them and sell for big bucks in Canada ;):yes:

Of course bTW… I have a colt for sale if interested… he’s in michigan we are very close to you ;)

[Daventry]

@Hiddenacresmi;5733204

here’s an idea… Canadians… buy your foals from USA (dollar very weak against Canadian dollar)…raise them, break them and sell for big bucks in Canada ;):yes:

Nope, we can’t skirt the Government on that either. As soon as they pass through Customs to get across the border, we get charged a 5% Government Sales Tax on the purchase price. :no:

[rodawn]

Although Daventry, prices in America are cheaper overall due to the economy, plus we save about 4% to 5% to buy American right now, since our dollar is hovering about $1.04 to $1.05. So, even if we get hit with the 5% Goods and Services Tax at the border, we still may land up a little ahead of the game.

[colorfan]

Great info, good to know the scoop!

I also found from experience that if I get a trial saddle it comes to me as if I am buying it so I have to pay the HST.
Once I send it back I can obtain a paper(email will do) verifying the return of the saddle then I can make a request to have my HST reimbursed.
Process has taken 3 months one time and going on 4 and waiting the second time.

[TrueColours]

Nope, we can’t skirt the Government on that either. As soon as they pass through Customs to get across the border, we get charged a 5% Government Sales Tax on the purchase price.

Yeah - 5% for you guys in Alberta, 13% for us poor schmucks in Ontario …

BUT … having said that, it really doesnt matter at all to me as I do my input / output credits each quarter and the hst paid on that American purchase of however much was paid, balances against the HST I pay on my purchases to run the farm with, so at the end of the day, I owe RevCanada or they owe me. Where I WOULD win in that case, is if I paid hst on a $10,000 American purchase = $1300.00 and I then turned around and sold that same horse to the UK so I didnt collect any HST on that sale, I would then be in a revenue loss situation of the $1300.00 and RevCanada would owe that back to me that quarter

[Cataluna]

Just thought I’d resurrect this thread with some questions.

I have an interested buyer in a 2 y/o mare of mine, and we’re dealing with a bit of confusion regarding getting the mare into the US and all the taxes involved.

What’s involved with the whole HST thing if the buyer is planning on personally hauling her? What taxes are to be paid at the border when she goes home, back to the US?

Should I charge her HST on her purchase price? Could she claim that HST and get it back in the US?

We’re both first time buyers/sellers across the boarder, and this is all clear as mud right now.

[TheBandit]

[QUOTE=Cataluna;5836889]
Just thought I’d resurrect this thread with some questions.

I have an interested buyer in a 2 y/o mare of mine, and we’re dealing with a bit of confusion regarding getting the mare into the US and all the taxes involved.

What’s involved with the whole HST thing if the buyer is planning on personally hauling her? What taxes are to be paid at the border when she goes home, back to the US?

Should I charge her HST on her purchase price? Could she claim that HST and get it back in the US?

We’re both first time buyers/sellers across the boarder, and this is all clear as mud right now.[/QUOTE]

Are you a registered business with an HST number or are you a person with a horse who is for sale?

[Cataluna]

Definitely not a business, just someone with a horse for sale (and who has NO IDEA how this all works).

[FalseImpression]

Be careful with info given over the phone by Rev. Canada. Even if you have a name, they are not held by that info. Only if they look into your file and give info (not advice), do they have to stick to it. Rev. Canada is not there to give advice, only to collect taxes.
I had the same situation leaving France one year with a camera and watch. I claimed the added value tax at the airport, went through security and was then stopped by a custom officer asking to see the watch and camera. They wanted to make sure it had left the country and I could not give it back to whomever was at the airport with me. So, whether you are a private individual or a business, if you can prove the goods (ie horse) left the country (custom paperwork), you should be able to claim the federal tax back ie 5%, not the provincial sales tax.
My own accountant has said to be careful with info given over the phone by Rev. Canada. They can say whatever they want, unless it is on a specific case, with number, name etc. They won’t be held to that info.!

[TheBandit]

[QUOTE=Cataluna;5837263]
Definitely not a business, just someone with a horse for sale (and who has NO IDEA how this all works).[/QUOTE]

You aren’t supposed to charge HST unless you have an HST number. (And that HST number must be provided on all bills of sales/receipts with the HST indicated as a separate $ amount.) HST charged has to be remitted to the government.

[Daventry]

@TheBandit;5837488

You aren’t supposed to charge HST unless you have an HST number. (And that HST number must be provided on all bills of sales/receipts with the HST indicated as a separate $ amount.) HST charged has to be remitted to the government.

That…and HST/GST is not charged to American buyers as long as they do not take possession of the horse until the horse is in the United States. If the U.S. buyer drives up to Canada and picks up their new horse, they will be forced to pay Canadian tax at the border. That being said, they can apply to the Canadian government for a refund on the tax. Here is the link and the exact wording from the Canadian government website. https://canadabusiness.ca/government…ing-sales-tax/

“Foreign customers (outside of Canada)
If you sell goods or services to customers outside of Canada, you are not required to collect GST/HST or PST, provided they take delivery of the goods or services outside of Canada.”

The buyer will have to pay an approximate $200-300 fee at the border for brokerage fees, vet fees, NAFTA forms, etc. Whether they take the horse across the border themselves or hire a hauler, they will still have to pay brokerage fees…as you are basically hiring a broker to act on your behalf, as far as filling out all of the NAFTA paperwork, etc.

[Emy]

Once again reviving this thread looking for some Cdn tax guidance.
So, we have an Ontario based client (they have an HST # for their horse business) about to sell their Harvard filly to a woman from Quebec.
I am thinking that she only needs to charge them 5%, if she “guarantees” delivery to QC by arranging/sending the horse through a 3rd party shipper.
If the QC woman wants to pick the horse up herself she will need to pay the full 13%.
And what about if our client personally delivers the horse to QC and charges the delivery with paperwork, is that acceptable or not?

Thanks for any help in advance!

[TrueColours]

The Quebec harmonized tax rate is 13% as well, so as far as I see it, 13% would need to be charged no matter who picks it up …

If the horse was being sold to a GST only province like Alberta, then the 5% only would apply

99% certain thats how it goes …