Hey, you Canadians (or border staters)

[JoshinNC]

I have a client who is based here in the US but is selling items in Canada and has obtained a Canadian GST number. Are they required to file a Canadian return? I think some of their paperwork is indicating this, but am not sure. I'm going to make some phone calls, but would love some help from someone who has expertise.

Thanks in advance!

[CMTaxA]

Yes. Your client will be expected to collect GST taxes on sales of items to Canadian customers.

The GST is a sales tax on consumption, similar to VAT in many other countries. With very limited exceptions, most Canadian customers who purchase tangible property are not exempt from this tax, regardless if the seller is a wholesale or retail establishment.

In addition, if your client sells to Newfoundland, New Brunswick, or Nova Scotia, he must collect an additional 8% provincial sales tax which is collectively referred to as HST. These amounts are reported as a combined total on the GST return.

Upon registration of GST, he may have received a guide which provides additional information specifically for non-residents. If not, he can request the guide from the Canada Revenue Agency

[JoshinNC]

We know about the GST, they been collecting that

Yes. Your client will be expected to collect GST taxes on sales of items to Canadian customers.

The GST is a sales tax on consumption, similar to VAT in many other countries. With very limited exceptions, most Canadian customers who purchase tangible property are not exempt from this tax, regardless if the seller is a wholesale or retail establishment.

In addition, if your client sells to Newfoundland, New Brunswick, or Nova Scotia, he must collect an additional 8% provincial sales tax which is collectively referred to as HST. These amounts are reported as a combined total on the GST return.

Upon registration of GST, he may have received a guide which provides additional information specifically for non-residents. If not, he can request the guide from the Canada Revenue Agency

My question, which was answered by the CRA today was whether they had to file a T2 (yes, they do).

Now, they have revenues of nearly $5 million dollars, but only about $50,000 comes from Canadian sales. According to the CRA rep we only report Canadian income on the return, but what expenses do I use to offset the income (worldwide expenses or only Canadian expenses)?