Canadians! What sort of sales taxes apply?

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greyhoundcode
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Canadians! What sort of sales taxes apply?

Post by greyhoundcode »

I appreciate different taxes exist in different provinces etc, but is there a "rule of thumb" for calculating final prices, ie add 20% and that's how much you'll be paying?
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Re: Canadians! What sort of sales taxes apply?

Post by pickle »

No rule of thumb as it depends entirely on the province. Alberta has 5% GST, but PEI has 14% HST (I believe). That said - it depends on where you're selling it from, not where the purchaser is living. So if your business is based in Alberta, charge 5%. If it's not in Canada, charge whatever tax you need to for the location you're at.
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greyhoundcode
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Re: Canadians! What sort of sales taxes apply?

Post by greyhoundcode »

Thanks Pickle.

A move from Blighty to BC is forthcoming. I need to do some proper research on all this stuff - well, speak to an expert really - but I was just after a quick primer.

Would I be correct in thinking that, when appropriately registered, businesses/individuals can reclaim tax on purchases? (Similar to the VAT system in the UK)?
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Re: Canadians! What sort of sales taxes apply?

Post by pickle »

You mean, can an Alberta resident who only has to pay 5% on goods, get the difference back when they pay 11% from goods in BC? I don't believe so. I think you have to pay the tax required in the province you're buying something from. I'm not an accountant though.
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Re: Canadians! What sort of sales taxes apply?

Post by Doug G »

A few years back I'd set up retail systems in Canada. At that time there was a national GST tax of around 7% and provincial sales tax that varied from province to province,

On a different subject, here in California there are different district sales taxes, and if you shipped goods by common carrier you had to collect sales tax based on the recipient's location, not your office location. Over-the-counter sales are taxed at the seller's location tax rate. I had to charge as much as 1% over my local tax rate when shipping to certain counties that had additional district tax rates.
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Re: Canadians! What sort of sales taxes apply?

Post by josh »

In the USA certain stuff is tax exempt, like food and non-tangible items like software.
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greyhoundcode
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Re: Canadians! What sort of sales taxes apply?

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josh wrote:In the USA certain stuff is tax exempt, like food and non-tangible items like software.
That's quite a bonus really.
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greyhoundcode
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Re: Canadians! What sort of sales taxes apply?

Post by greyhoundcode »

The software being tax-exempt, I mean.
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Re: Canadians! What sort of sales taxes apply?

Post by Doug G »

n the USA certain stuff is tax exempt, like food and non-tangible items like software.
That's quite a bonus really.
greyhoundcode wrote:The software being tax-exempt, I mean.
It would be, if it were accurate. Sales tax varies from state to state. The sale of software is taxable here. Don't rely on a tech forum for tax advice is a good rule of thumb :D
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greyhoundcode
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Re: Canadians! What sort of sales taxes apply?

Post by greyhoundcode »

Doug G wrote:Don't rely on a tech forum for tax advice is a good rule of thumb :D
It was just for a quick heads up really, something that's been in the back of my mind for a bit. But yeah, I'll seek professional advice once there.

Thanks for the replies.
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Re: Canadians! What sort of sales taxes apply?

Post by John Cartwright »

greyhoundcode wrote:I appreciate different taxes exist in different provinces etc, but is there a "rule of thumb" for calculating final prices, ie add 20% and that's how much you'll be paying?
I assume your trying to pre-calculate shipping costs. Does your shipping provider not provide an API for such things?
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Re: Canadians! What sort of sales taxes apply?

Post by josh »

Meh.

I called the IRS (Internal Revenue Service). It goes based on where you ship the tangible item to. I email my customers a license key, so where am I shipping? The IRS told me not to collect sales tax. Didn't ask what state I was in.

If nothing is shipped, its not a good its a service. Sales tax does not apply to services, in all 52 states (I think.). I do know that certain types of services are taxed, but from what I read up software isn't one

Anyways though Doug G is right, you should ultimately not even trust your accountant, as in some areas you'll be liable for their mistakes. Call your local tax office.

Here's another resource I found (for the USA)
>I have never heard of this intangibles rule. Every state I know of charges sales tax on software.

When I specifically asked my state Dept of Revenue, I was specifically told I did not have to collect sales tax for download-only (intangible) software, and I haven't done so for 5 years now. They would have come after me by now if I was mistaken. And if they did come after me, they'd have some explaining to do since they are the ones who told me it wasn't required.
Steve Troxell
Sunday, November 26, 2006
http://discuss.joelonsoftware.com/defau ... .419672.11

and the best one, which I agree with The only advice which matters is an authoritative source for the OP's state.

For example with the Hawaii example, here's what hawaii.gov has to say

http://www6.hawaii.gov/tax/a7_faq.htm
Q: What is Hawaii's sales tax rate?
A: Hawaii does not have a sales tax; instead, we have the general excise tax, which is assessed on all business activities. The tax rate is .15% for Insurance Commission, .50% for Wholesaling, Manufacturing, Producing, Wholesale Services, and Use Tax on Imports For Resale, and 4% for all others. For differences between the general excise tax and sales tax, please see Tax Facts 96-1, General Excise vs. Sales Tax.
So in my non-legal opinion, software that is sent online is not subject to sales tax, but they may have the same thing going by some name other than "sales tax". In fact I read up on it and they are different taxes. A sales tax applies to an actual sales. An excise tax is like your regular income tax. So even in Hawaii software is not subject to sales tax, because sales tax isn't a legal concept there. You obviously have to pay your federal & state income taxes, regardless of how you made that money.
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greyhoundcode
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Re: Canadians! What sort of sales taxes apply?

Post by greyhoundcode »

John Cartwright wrote:I assume your trying to pre-calculate shipping costs. Does your shipping provider not provide an API for such things?
Not programming related actually, or only indirectly. I'm going to be setting up shop afresh in the land of maple leafs, I was just doing some back-of-a-fag-packet calculations.
josh wrote:Anyways though Doug G is right, you should ultimately not even trust your accountant, as in some areas you'll be liable for their mistakes.
When I specifically asked my state Dept of Revenue, I was specifically told I did not have to collect sales tax for download-only (intangible) software, and I haven't done so for 5 years now. They would have come after me by now if I was mistaken. And if they did come after me, they'd have some explaining to do since they are the ones who told me it wasn't required.
Steve Troxell
Sunday, November 26, 2006
Interestingly, as I understand it - in a UK context - HMRC's decisions are nothing more than their interpretation, and although in practice they might show a bit of lee-way when they make mistakes (such as issuing incorrect advice) they are not legally obliged to do so, therefore one can potentially be liable for HMRC's mistakes in addition to those of accountants 8O
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