Canadians - Listen Up (GST) - GoFuckYourself.com - Adult Webmaster Forum

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Dusen

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Canadians - Listen Up (GST)

03-04-2004, 11:17 AM

So during my tax question thread, I did some board searching about revenue and such, and found some SHOCKING opinions on the GST/HST Issue. What was even more shocking is that people seemingly simply took what was said as truth / the final ruling.

If you are a webmaster in Canada you need to REALLY check out what is going on, because from what I have been reading, most people have no idea what is what.

1) If you collect money in excess (Gross) of ~30k/year as a Canadian from *ANY* sources combined as a non-employee (i.e. providing a service), you MUST register to collect GST from all sources of income. (Aside from some exemptions which do not affect webmasters).

2) There are several "0 Rating Provisions" that you can apply to be considered under which would require you to collect 0% GST. You are STILL REQUIRED TO REGISTER TO COLLECT GST, however this essentially means you collect nothing and the government expects nothing. However, you need to request a ruling on YOUR PERSONAL situation or you have NOTHING and could get SERIOUSLY screwed. You can't just say "Well Dusen got a ruling and I do the same thing"

3) Call Revenue Canada and talk to your account for christ sake. If you don't have one than REALLY DIG DEEP NOW before it gets too late for the next tax year's return. Don't do your taxes on GFY! Would you stake YOUR finances and record on what someome said on a message board? WELL YOU ARE.

This is your life folks. Heed my warning. Just becuase you think "I'm just an affiliate, this does not affect me" does not make it go away.

Last edited by Dusen; 03-04-2004, 11:20 AM.

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SENSEX

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03-04-2004, 11:30 AM

at the end of the year I give my accountant all my papers and he handles everything. His firm also acts as my bookeeper throughout the year.
but thanks, people really should learn about what the hell they are doing.
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doober

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#3

03-04-2004, 11:34 AM

affiliates dont make sales they make commissions for referred sales, the money they make is much more than the actual sale hence is considered a commission which the GST doesnt apply to
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Dusen

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03-04-2004, 11:41 AM

Originally posted by doober
affiliates dont make sales they make commissions for referred sales, the money they make is much more than the actual sale hence is considered a commission which the GST doesnt apply to

The main thrust of my post was get people who Don't know or have only read advice here to talk to Revenue Canada and an accounant. I saw a LOT of people who probably don't deal with either and are really headed towards trouble without realizing it.

The commission issue from a US Corp is one of the "0 Rating Provisions", but you are still required to register if you collect over $30k for any service you provide. You NEED to. Period. NO execptions (Aside from ones that do not apply to webmasters).

So I guess what I am saying is that if you wish to follow Canadian law, your above statement is false.

Last edited by Dusen; 03-04-2004, 11:47 AM.

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CoolE

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03-04-2004, 12:15 PM

Originally posted by Dusen

The main thrust of my post was get people who Don't know or have only read advice here to talk to Revenue Canada and an accounant. I saw a LOT of people who probably don't deal with either and are really headed towards trouble without realizing it.

The commission issue from a US Corp is one of the "0 Rating Provisions", but you are still required to register if you collect over $30k for any service you provide. You NEED to. Period. NO execptions (Aside from ones that do not apply to webmasters).

So I guess what I am saying is that if you wish to follow Canadian law, your above statement is false.

You are right about the zero-rated designation Dusen. My last two accountants have taken that position, and my 2 GST audits in the last 3 years have confirmed it (that is, CCRA agreed).

There's also a huge advantage to being "zero-rated" as opposed to "exempt", namely you get all GST you paid to run the business back. For me that was almost $1000 last year. It is "found money", as they say.

But I disagree with your advice to call CCRA to discuss it. Talk to an accountant and that's it. Calling the CCRA to discuss the GST is like calling a US Federal Prosecutor to get their opinion as to whether you DID or DID NOT just commit a murder. No possible good can come of it. The CCRA is not here to help us, they are here to get every cent they can from us - that is the nature of the beast. Or maybe that is just the Albertan in me talking.

Last edited by CoolE; 03-04-2004, 12:27 PM.
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Danny

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03-04-2004, 12:41 PM

Please note that the process of getting zero-rated is fairly simple. Make an apt to talk with someone from your local Revenue Office. Tell them what you do and make sure you explain it well. Several factors will effect what they say from my past dealings with this. Are you billing anyone for a product? Is it you billing people or a third party billing company who bills people? Who's billing and Where the billing happens makes a huge difference. Where is the service being provided from (where are you hosted)? Once again huge deal. If the service (lets say a paysite) is comming out of a hosting center in Boston and the end user is sitting in Orlando and they are being billed by a company in LA then revenue Canada has no claim to any sales tax on this type of sale. And you can make the case that bascially you are being paid a management fee from the billing company based on your performace. That's how I've always tried explaining it to them and haven't had a problem yet. When you are done talking with them you should be walking out the door with a peice of paper signed by a Revenue Canada employee that makes you zero-rated. Unless you lie whoreably to them about how your business works they will not be able to come around and do anything.

Go do it.. It's important to do.

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Dildozer

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03-04-2004, 12:43 PM

Thanks for the info Danny!

I also heard about incorporation in Delaware as a way to avoid those. What are your thoughts?

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WiredGuy

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#8

03-04-2004, 12:52 PM

First off, calm down. You seem to be freaking out a little based on your last two threads about Canadian taxation. I went through a full CCRA government audit last year and it wasn't that bad.

First off, in regards to GST these are the two principles to keep in mind:

1) As a canadian webmaster, you are responsible for collecting GST on canadian sponsors. US based revenues from sponsors are not subject to GST.

2) As a canadian paysite owner, you need to keep track of your customers country information. You are responsible for collecting gst on canadian customers only. If you do not know the percentage of customers who are canadian, CCRA will assume 100% are canadian.

That's it. Nothing crazy otherwise.
WG

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#9

03-04-2004, 01:04 PM

The main thrust of my post was get people who Don't know or have only read advice here to talk to Revenue Canada and an accounant. I saw a LOT of people who probably don't deal with either and are really headed towards trouble without realizing it.

I will bet that quite a few don't claim shit! or even have a registered business name or sole proprietorship.
I got a GST number when I incorperated and have a sexy accountant to work the finer details.

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Dusen

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03-04-2004, 01:19 PM

Originally posted by WiredGuy

1) As a canadian webmaster, you are responsible for collecting GST on canadian sponsors. US based revenues from sponsors are not subject to GST.

That's it. Nothing crazy otherwise.
WG

Finding this out was nothing new to me - I have known this for quite some time, my point of the thread was to educate others. In searching for my other tax concerns I came upon threads where people expressed "Naw, you don't have to collect GST" and people said Ok. That is not true.

You need to talk to RC and get it hammered out that you don't.

So I'm saying false to you too, simply not collecting and ignoring it will lead to issues. I just wanted to make everyone aware. Mabye dispell some rumors.

Last edited by Dusen; 03-04-2004, 01:24 PM.

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Dusen

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03-04-2004, 01:22 PM

Originally posted by Danny
Please note that the process of getting zero-rated is fairly simple. Make an apt to talk with someone from your local Revenue Office. Tell them what you do and make sure you explain it well.

Agreed, and you can also fax a request in, as I did. I didn't even go to the office and got it passed through.

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Danny

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#12

03-04-2004, 01:30 PM

Originally posted by Dildozer
Thanks for the info Danny!

I also heard about incorporation in Delaware as a way to avoid those. What are your thoughts?

You can do that to help distance yourself and provide another layer of seperation. At some point you are gonna have to get some money sent to you. You run into virtually the same question. Were you providing a taxable service or product to this company that you have setup in Delaware? Are you an employee of this company in Delaware and if you are are you following the right income tax laws? Are you an indipendent contractor maybe? Possible that these payments are dividends from a company in Delaware that you own stock in (you know like 100% of the stock )? This can go a million different ways.

Each situation for what they are trying to accomplish is different. So my thoughts on it are:

If you wanna go down this road find a good accountant and a good tax lawyer and talk to them about what you are trying to do. They can tell you what is possible and what isn't. They may have ideas that you had never even dreamed of. They also keep you (hopefully) within the laws and regulations of where ever you live. Everywhere has there own rules, so make sure that who you pick knows the rules for where you live. It's what they do for a living, they should be good at it.

- Danny
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