Valuable Revenue Canada advice for Canadian sellers ...

[Forte]

[QUOTE=Emy;6072706]
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![/QUOTE]
I recently asked my accountant this very same question regarding selling to a quebece buyer and he said that I should only charge 5% GST to a Quebec seller if the horse is being delivered by a commercial shipper. I don’t believe Quebec has HST.

[Emy]

Truecolours your post made me nervous so I did more investigating and yes Forte is correct. If we use a shipper to deliver her it will be ‘just’ 5%.

Thanks very much for the replies! It is rather confusing…

[Ravencrest_Camp]

[QUOTE=TrueColours;6072864]
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 … :)[/QUOTE]

Quebec has the GST and the QST (Quebec Sales Tax), but they are not harmonized.

If you purchase goods or services in Quebec you pay 5% GST and then 9.5% QST on the purchase price plus the GST. So in Quebec you are paying tax on tax.

[Forte]

[QUOTE=Ravencrest_Camp;6075456]
Quebec has the GST and the QST (Quebec Sales Tax), but they are not harmonized.

If you purchase goods or services in Quebec you pay 5% GST and then 9.5% QST on the purchase price plus the GST. So in Quebec you are paying tax on tax.[/QUOTE]

Yikes! And I was complaining when the 12% HST came in BC.

[EquusMagnificus]

Hold on. What difference does it make if it’s delivered vs picked-up? The taxes are charged according to the province of residence of the buyer.

[Emy]

According to Revenue Canada you must “guarentee” the goods have left Ontario in order to charge 5% vs. Ontario’s 13%. You can do this by arranging and having a 3rd party shipper haul the horse directly from your custody to Quebec and keep the paperwork to prove that this was done for tax time.
If the Quebec client wants to pick the horse up personally they claim there is nothing to prevent them from buying it at 5% tax and dropping it off at a farm down the road in Ontario… It all gets a big eyeroll from me.

[EquusMagnificus]

Errr… Ok. But your bill of sale and all info would be in the name of a person residing in QC.

Even if the horse is the be left in Ontario, the horse is owned by a QC resident… I don’t see how this can make sense in any type of business.

Ie. I am a translator by trade. I will translate documents for an Ontario-based organization. The document will be used in QC, obviously, hence the need for translation. I do not charge PST because the client IS in Ontario!

I really don’t see what the final location of the good has to do with the application or not of a sales tax…

[Sunnydays]

Equus - what you say makes sense … but we are talking about Revenue Canada …

[Backstage]

[QUOTE=EquusMagnificus;6077426]
Errr… Ok. But your bill of sale and all info would be in the name of a person residing in QC.

Even if the horse is the be left in Ontario, the horse is owned by a QC resident… I don’t see how this can make sense in any type of business.

Ie. I am a translator by trade. I will translate documents for an Ontario-based organization. The document will be used in QC, obviously, hence the need for translation. I do not charge PST because the client IS in Ontario!

I really don’t see what the final location of the good has to do with the application or not of a sales tax…[/QUOTE]

I won’t really comment on the tax implications because I simply don’t know the answer, but it is definitely false to state that document will necessarily be used in Quebec because it is being translated into French! We get documents translated into French for use in Ontario quite often. That said, I don’t think you refrain from collecting and remitting PST/HST becuase your product will be used in Quebec but rather because you are operating in Quebec. If you were based in Ontario and the documents were being translated for an Ontario-based org for use in Quebec, I suspect you would collect and remit HST.

[Forte]

I have talked to my accountant about this several times, as I have sold several horses to the US and out of province. It is not enough that the address of the person you are selling to is in a different province. You must ensure that the horse was delivered to that province (or the US). I always keep a copy of the receipt from the shipping company, and a copy of the stamped health certificate if the horse is crossing into the US. If your buyer wants to pick up the horse themselves, you must charge them the full HST of your province.

[EquusMagnificus]

[QUOTE=Backstage;6078545]
I won’t really comment on the tax implications because I simply don’t know the answer, but it is definitely false to state that document will necessarily be used in Quebec because it is being translated into French! We get documents translated into French for use in Ontario quite often. [/QUOTE]

Of course But in my example, I know the documents will mainly be used in QC. It was for the sake of the example. Don’t worry, I am aware of the other French-speaking groups living outside of Québec!

[EquusMagnificus]

[QUOTE=Backstage;6078545]
That said, I don’t think you refrain from collecting and remitting PST/HST becuase your product will be used in Quebec but rather because you are operating in Quebec. If you were based in Ontario and the documents were being translated for an Ontario-based org for use in Quebec, I suspect you would collect and remit HST.[/QUOTE]

My understanding is that it is based on the province of residence of the billed organization, not on the province of residence of the invoicer… Sheesh. Confusing stuff. Apparently, I’ll need to check this further.

[mbm]

[QUOTE=TrueColours;5733032]
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 … :)[/QUOTE]

this is all just normal sales tax (GST/VAT) protocol… any accountant or bookkeeper worth their salt would know this …

it’s all about where the buyer lives and where they are when they purchase…

[mbm]

[QUOTE=EquusMagnificus;6077139]
Hold on. What difference does it make if it’s delivered vs picked-up? The taxes are charged according to the province of residence of the buyer.[/QUOTE]

it makes a difference because that is how the various tax rates are organized…

the business doing the selling has to charge tax based on their local rate if someone comes to their location. If the person buying is out of state/country and has the items shipped to same, then they do NOT need to charge tax/GST/VAT.

it is the only way that tax orgs can easily know who to charge tax too…

this is why us Americans who get charged GST/VAT when we are traveling (i.e. at the sellers location) can usually get refunds from the tax authority … but the seller has to pay the tax …

it is really the only easy way to figure out who to charge tax to - you charge tax to anyone who is in your state (etc) and anyone who comes into your shop - no matter where they are from.

just be thankful you don’t live in California where there are hundreds of different local tax rates - an accountants nightmare!

[Cindy_s_Warmbloods]

Would not just having documentation (stamped border papers) that the horse actually crossed the border be sufficient or does the Canadian seller really have to arrange transportation as well? Can we not just not showed the stamped papers and copy of the receipt from the hauler who took the horse and a bill of sale?

[rodawn]

So I went hunting for this thread because this very subject came up again with me on purchasing semen from a province that normally does have HST, but I live in a province that does not have HST.

I found a genuine, written down article published by the Government of Canada.

http://www.canadabusiness.ca/eng/page/2651/

Long and short: If you are selling a product and shipping said product to a province, then the seller is responsible for collecting HST, PST/GST, or just GST depending on the province your customer lives.

Long and short - those of us living in Alberta are never charged PST or HST. Only GST.

[FalseImpression]

It may not be harmonized, but the taxes in Qc are higher than in Ontario.
QST = 9.975 % and GST = 5%.
http://www.revenuquebec.ca/en/entreprise/taxes/tvq_tps/modifications-regime-tvq.aspx
I guess you, charging HST, would be cheaper for them… but I am not really sure how it works. Just checked the numbers.

[rodawn]

Regarding Quebec, they’re always a little bit different, but it’s my understanding that if a seller ends up selling/shipping horses/semen/embryos, etc. to a customer in Quebec, the seller has to apply for a QST (Quebec Sales Tax) number and the Quebec customer is charged the full QST only.

So, really, if you’re in business, you should have this number ahead of time to be prepared. Equestrian business is very rarely ever a local thing as the market is usually too small in a local setting and so you need to be prepared right off the bat for inter-provincial and/or international sales and shipping.

Quick examples:

Scenario 1: If you (Seller) live in Ontario then all your Ontario customers are charged the Ontario HST. Easy. But if Ontario Seller has a customer who lives in Alberta, only Alberta’s GST is charged to the purchaser.

Scenario 2: If SELLER lives in Alberta and selling/shipping a horse to Nova Scotia, then you must charge the customer all the taxes applicable to Nova Scotia.

Scenario 3: If SELLER is selling/shipping horse/semen/embryos to the United States, Seller does not charge Customer any tax whatsoever, UNLESS the US customer comes up here to personally pick it up, in which case Seller is obligated to charge full tax applicable to THEIR PROVINCE. This was as True Colours discovered.

Note to USA clientelle - if you are charged taxes by a Canadian seller, you can apply to have it reimbursed to you.

In all cases the seller must arrange for the shipping, even if you use the client’s FedEx# so FedEx direct bills.

Example: I live in Alberta - a GST-only province. I buy semen from British Columbia, which is an HST province. SO always arranges for the shipping and is there when FedEx picks up. FedEx direct bills me because my FedEx Acct# is used for payment of shipping charges. Even with all of that, I am still never charged HST for the semen, only 5% GST. If I drove all the way to BC to pick up, then SO would be obligated to charge me BC’s Harmonized Sales Tax.

[Spike]

If you purchase goods or services in Quebec you pay 5% GST and then 9.5% QST on the purchase price plus the GST. So in Quebec you are paying tax on tax.

That was the case up until Dec 31, 2012. Since Jan. 01, 2013, now it is 5% GST on the purchase price and 9.975% QST also on the purchase price, this time alone. NO more tax on tax. Well, it makes no differences, since the total amount paid is the same. Just no more QST on GST.

Just had to say.