>>>>>>>Either way, its usually good to register a GST account because if your Canadian purchases outweighs your Canadian sales, you'll get a GST refund. So the obvious way to get a refund every time is deal with US based sponsors

Bingo.

>>>>Well i don't get to deduct anything because i buy everything from the states

Then you are making a HUGE mistake.

Well there really isn't anything i can buy from canada besides computer equipment.

Use your imagination. Entertainment, meals, travel, vehicle expenses. Part of the appeal of of being in this business is the tax benefits. Are you incorporated? If not, get it done. Do yourself a favour and talk to an accountant.

I never got incorporated because i didn't want the hassle of having a seperate bank account, seperate credit cards (which i would have to build up the credit just to get it to a level where it would be useful to me) etc. but i know tax wise its the way to go.

<<<<hassle of having a seperate bank account

Then you are paying tax from income at the personal rate which at the top end in Ontario is 47&#37; as opposed to 23% for corporate. Thats insane brother. I know its a hassle but believe me, its worth it.

I was sitting in a Canada Revenue Agency office for a several hours going over this stuff while getting audited last year. They looked into it, and came back saying I didn't have to register or pay it because my earnings were from out of country. If they could have billed me for it, I'm sure they would have tried.

If you do over $30k from within the country then you have to register. Might be different if I was shipping a product, I have no idea.

Did you get a definite answer on this subject ?

This is the one and only answer to this question. You only charge GST to canadian entities doing business in canada, period.

If you collect affiliate commissions you are collecting a payment for sales and marketing services rendered. If the company sending you the money is not a canadian company who is not doing business in canada, you do not charge GST.

Ok, but this question hasn't been answered yet.

Directfiesta said that if you make more than 30k (even if it's not from canadian companies), you have to register. And if I need to register, I want to be sure how I should describe Affiliate Marketing to the Tax people. Because my experience with these people from the government is that one person will tell you something and another will tell you the opposite. And I better be prepared when I will go to their office because every details will make a difference and they are certainly not here to help me.

I would definitely register - any canadian business should have a business number and file returns. Even if you over zero dollars, its much easier to be proactive.

If they ask about affiiate marketing - they don't need to know that it's a pay-per-sale commission. It's money for sales and marketing services that happens to vary on performace. You should create invoices every month internally for each sponsor program who has sent you money. On the invoices for canadian sponsors you would charge GST, on all the others, you would not. It's a good habit and an easy way to keep track of your streams of income.

In working with alot of affiliates there is something I notice quite often. I would say that the majority of individuals do not treat their webmaster activities as a business - they keep poor records (or none at all), and have generally bad business habits and few systems in place. (This isn't directed to you specifically.. im just going off on a tangent here)

The people I work with who make the most money also happen to run a tight ship. Now one might say "Oh If I was making $25,000 a month I would treat it more like a business". But the reality is, on order to even GET to that point, you need to have effective business systems in place. If you make $1k - $5k per month in revenue you might think it's redundant to have systems, but in many cases it is precisely what is holding people back from growing their business - it's a viscous cycle.

Why ? Is it bad to say it's a pay-per-sale commission ? Because I'm pretty sure they will ask more on that commission and hwat I mean by "based on performance".

No, what I meant was you don't have to get too complicated and explain the entire affiliate marketing business. All they see is $x per week coming in and are curious as to if they're owed their pound of flesh :winkwink:

You're a sales and marketing company that is paid a %age based on sales, that they will understand.