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| *Ostroff, Fair and Company>>>Canada Taxes |
Canadian GST/QST tax Exempt? |
I am starting a U.S. based business. However, I will have a Canadian partner. I will buy equipment in Canada to be delivered and used in Canada. Invoices for that equipment will be sent to the US and paid in The US. Am I exempt from Canadian GST/QST tax? if so, should I request to have invoices exclude it? or do I need to pay it and then get a refund from the Canadian IRS? Any guidance will be tremendously appreciated!! you pay GST but then you get it back from the Canadian Revenue Agency (if you have a GST number) CMA Canada - July 2004 All businesses carrying on commercial activities in Canada must register for GST if their annual gross revenues exceed $30,000. Those with less than $30,000 revenues per year have the option of registering. While this is a concession to persons with limited commercial activity, it is important to note only registered businesses may claim a refund of GST paid (i.e. input tax credits). Therefore, the GST is a real cost for non-registrants. If a small business pays more GST than it collects, it should register for GST so that a refund can be claimed. Of course, administrative costs to comply may increase, however the benefit of registering usually outweighs the costs. A business for GST purposes includes organizations, such as charities. Therefore, most charities are required to register and collect GST. Of course, these organizations are also entitled to claim input tax credits for GST paid. The ability to claim input tax credits mirrors the normal rules for calculating income for tax purposes. If an expense is normally deductible for tax purposes, then an input tax credit may be claimed on GST paid on that expense. If the expense is nondeductible, no input tax credits with regards to that expense may be claimed. For example, if you pay GST on a meal expense, only 50% of the GST is recoverable since only 50% of the expense is deductible for tax. Exceptions to the above general rule are salaries and wages, and depreciation. These expenses, while deductible for accounting, do not attract GST. Source(s): CMA Canada - July 2004 http://www.cra-arc.gc.ca/tax/business/to... If it is purchased in Canada, for use in Canada I believe you must pay the GST/HST/QST. Depending on your business you can apply for an exemption from the government. |
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