Canadian webmasters and gst.
 

I got a call from Canada Revenue wanting to "clarify" what my profession is to see if they need to look into gst. Not sure exactly what they mean but being only an affiliate I am not expected to pay gst on my commissions am I?I just find it strange they are calling and wonder what they want from me.

They want your money, that's what they want.

GST is collected for goods and services sold in Canada. If you are selling a product or service to a Canadian in Canada then you need to collect GST and pay it to the government. This is tracked with your GST number that they give you.

If they think you are selling stuff, but they aren't getting their cut, they might make a call.

I also know that they like to make calls just to confirm their records in interesting ways. We got a call one time saying that we owed them some crazy amount of money, when we didn't even have gross sales anywhere near that amount, much less outstanding GST. After I explained this, they moved on.

Just my experience.

I am pretty sure that you only have to pay gst if the company you are using is also Canadian.

I pay GST for income I earn from Canadian companies - thankfully, at least in terms of paying taxes, that's only a few ;)

Do you do more then 30K a year of sales .

If so, are you registered ? Even if your sales are out of Canada , if you do 30K + , you must register.

Then you must report your tax owed ( collected minus paid ). These guys can be very tricky, so be carefull .

hxxp://www.cra-arc.gc.ca/menu-e.html ( replace xx by tt - no need for them to come here ... )

Switch to some American or European Sponsor. ;)

:eek7 :eek7

.. or hide under a rock... that is also good advice :thumbsup

Well like i said i am just an affiliate, I am not selling anything myself. There is no way to tell if a sale i sent to a program is a canadian or not anyways.

But i have to pay gst on commissions made from Canadian companies? Seems strange. I don't really deal with any canadian companies though besides a few sales here and there.

You don't have to collect it if they are an affiliate program based in the US. If they are based in Canada, then technically you are supposed to collect it from the sponsor when you receive your affiliate commissions. Some supposedly will pay this to you if you ask them, otherwise you just have to pay it out of your own pocket.

This is from their site:

Example

A non-resident person who is not registered for GST/HST purposes pays a fee to a registered Canadian
Web site owner to place banner ads for its business on the Web site.
The Canadian Web site owner is not required to collect the GST/HST on the fee, as the supply to the
non-resident is an advertising service that is zero-rated under section 8 of Part V of Schedule VI.

replace the XXX with www

XXX.cra-arc.gc.ca/E/pub/gm/b-090/b-090-e.pdf

Not true. I was audited last year and my auditor checked into it for me, and said that I didn't have to register or pay GST because my earnings were from out of country. You only have to pay GST if you earn more than $30k/year from a Canadian source.

I don't get it. When you goto Futureshop and buy a printer, the kid gets his comission does HE pay GST on your sale? No, he doesn't.

If you're an affiliate you pay income tax on what YOU bring in. I take my income under my own personal name. As an affiliate you do not have access to payment information from sponsors.

If you're taking the income as a corporation, you still only pay GST on the income you took in yourself, not what you generated for another company.

No the kid doesn't pay it, but Futureshop does. If you sell memberships for Platinumbucks, they collect the GST in their membership fee and IF you request it, they should give it to you. Then you just hand the money over to the GST people. It shouldn't be any money out of your pocket. You're just an unpaid tax collector for Revenue Canada. Actually, in return for the annoyance, you do at least get the GST back on business expenses.

If you don't collect it then yes, you'd pay it out of your own pocket. Just like when FutureShop has "NO GST" days. They still have to pay the GST, they just pay it, for lack of a better term, "Out of their own pocket".

Summary:

If you make less than 30k/year in SALES with your self-employment or business, you don't need to register for taxes but you still can if you wish.

If you deal with Canadian companies as an affiliate, they will need to send you the tax if you are registered because you need to charge them as they are your client(like gamma for exemple).

When you purchase something for your business, you will pay tax, but at the end of the year, you can get it back from the govt, because you also charge tax when you sell your services.

If you sell to American companies, as an affiliate for example, you don't need to charge taxes(I clarified that with the guy from the Govt when I went at their offices to get my tax numbers).

Anyways, if you have any question, I would suggest you to consult your accountant and the Govt directly, as their authority on this is way better than some guy on a message board :)

hxxp://www.cra-arc.gc.ca/tax/business/topics/gst/soleprop/registering/register/question3-e.html

I would check again if I were you ....

damn, and people talk about the US being tyrannical?

I would shit if someone called my home asking me what my profession was....
holy shit.

Our tax system runs on honesty, of course they'll call you if they think you're cheating them.

Since your clients are almost purely non-canadian, and you don't sell a product to Canadians specifically, you have to remit GST, then collect it back at the end of the quarter or year, depending on when and how you file your GST. It's an extra step, but it's a wash because of your specific situation.

Once the Cdn gov't understands your situation and why you do it this way, they won't bother you again. We had to do this back in the day.

bottom line, you can only 'charge' GST to a canadian entity.

So, viewing affiliate commissions as payments for services rendered, GST can only be charged if the company that the paymnets come from is Canadian.

bump for a good thread

If you're under 30k in sales you shouldn't be applicable.
If you're over, then you need to pay GST on the affiliate programs that are Canadian based or have a registered GST account number (some american companies do register for GST).
WG

Ok, so under 30k from canadian companies or 30k total? I am over 30k gross but my dealings with canadian companies are typically less than 1k per year. I never knew i had to pay taxes on that. I thought the company pays taxes on everything they make, so why would I have to since that income has already been taxed. I hope they don't want to go through all my past years....what a pain in the ass.

Do you mean GST or INCOME tax??

:1orglaugh:1orglaugh:1orglaugh

BlackCrayon., read my quote above : it says WORLDWIDE ... So all your sales could be out of he country, if you do 30k+ , you must REGISTER...

You will have o submit reports, but in that case no taxes, as long as the service rendered by you is considered not to have been rendered in Canada ....

Read the other link of another poster ( the only other one that actually posted a link to the gov site ).

:2 cents:

I honestly don't remember if its 30k for canadian sales or worldwide sales. 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. If most of your income comes from there and most of your purchases are in Canada, it would be to your advantage to get a GST account number.
WG

so whats the kicker for a canadian webmaster doing over 30 k in website sales?
Is he supposed to pay gst for canadian purchasers of his sites?

yes.......

But platinumbucks would only charge GST if that person joining was canadian, yet everyone else where seems to say i have to pay GST on ALL income made from a Canadian based sponsor. Makes no sense to me. I don't see why i should have to pay GST on any income from canadian based sponsors or not. I am not selling anything to anyone.

No problem then : you have no income .....

We got some kind of ruling # from CRA for this matter. They understand and agree that don't bill/owe GST when we deal with US companies and customers.

I suppose you should be paying GST on remittances from Canadian sponsors.

Best bet is to just move, as Canada is a shitty place to live for a webmaster.

Rev Canada has a relatively small but aggressive financial task force. Perhaps they are concerned as to your sources of income, e.g. checks/payments from non Canada/US companies would trigger them.

Just a thought :)

gst is one thing

but as far as income tax is concerned, all income you make from any worldwide source needs to be declared if you are a canadian resident

so yes, you need to report all of your earnings, whether you think you made a profit or not

Of course i have income but all i do is direct traffic to a website that sells something. I personally don't sell anything. Why should i have to pay gst on commissions from canadian sponsors if those sponsors are already paying gst on that money anyways?

Of course i pay income tax on all income but in my 9 years of doing this paying gst on that income has never been in an issue.

You are selling your knowledge, your work ...

In the GST ( Goods & Service Tax ) , that is the service part ....

Why does a plumber have to charge GST on his time ? or a mechanic ? or a webdesigner ?

The whole purpose of the GST tax is to follow the money from the bottom till the top ..

That is why you are also allowed to DEDUCT what you paid in GST to companies ....


I sell hosting to canadian clients, I charge them GST even tough I already paid the GST to the equipment supplier and to the bandwith supplier ....

Tax is not something to please you or to make sense ... taxes are there for the taxman.

Well i don't get to deduct anything because i buy everything from the states. Seems to me this is just another way to screw the little guy. Why should one single transaction be taxed over and over again? Taxes have to make sense, just because you've accepted what you've been told it is doesn't mean a lawyer would see it the same way. I am not selling my work or knowledge. I could work all day, i could work for years and send traffic but no necessairly make anything off it if no one buys anything. Does a car salesman have to pay gst on his commission on a sale? There is nothing that really defines an affiliate according to revenue canada which is unfair. If anything i should only have to pay taxes on joins that come from canadians if those joins are truely from my "work", not on all income. I don't give sponsors an invoice, i don't get to decide what they pay me for my long hours of work. Its nothing like a mechanic or a plumber. I can see if i was a web designer doing work for canadian clients but i am not. We'll see how the tax people like what i have to say tomorrow i guess.

let us know how it goes, in this thread

Maybe Fris called his dad on you LOL!

DH

>>>>>>>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.