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Canadian GST/HST and U.S. Sales Tax

Google Employee
# 1
Google Employee

Are you taxed with taxation questions? For countries where VAT is common, most AdWords-related tax questions can be answered here.

 

However, if you’re based in the United States or Canada, you may be wondering whether state sales tax or GST/HST applies to you. The short and simple answer is that for Canada and the U.S., Google doesn’t include tax in your AdWords charges.

 

So, for example, that $750 charge to your credit card is for $750 worth of clicks, and doesn’t include state taxes or GST/HST.

1 Expert replyverified_user

Re: Canadian GST/HST and U.S. Sales Tax

Google Employee
# 2
Google Employee
Hmm, that link doesn't appear to be opening the same way for everyone.

If you'd like to learn about taxes in your country and that link didn't work for you, try this one: https://support.google.com/adwords/answer/2375370?hl=en&ref_topic=3121938

Re: Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 3
Visitor ✭ ✭ ✭

So I am wondering then - if no sales VAT apply why the link you posted says that businesses need to provide Google tax number when filing their taxes?

Also one of my clients somehow got coded as an individual rather than a business when the account was opened. If no sales taxes apply what would the difference be anyway?

Re: Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 4
Visitor ✭ ✭ ✭
What I do is this. I just back calculate the tax and claim the GST on Google AdWords regardless. Everything in Canada is subject to GST. An easy link to calculate that is here:
http://helpsme.com/tools/free-gst-hst-pst-sales-tax-calculator-canada

Re: Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 5
Visitor ✭ ✭ ✭
HI Scott, Has this ever been tested with CRA? have they ever audited you or sent you a request for information? we spend a fortune on Google advertising and we do not submit but would like to?

Re: Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 6
Visitor ✭ ✭ ✭
No, I have not tested this with the CRA. I have friend who is an judicator at GST and he says that no charge is exempt from GST except in very special circumstances. Therefore I claim the GST. This has also been the advice of my accountant. Of course in all things you must seek the advice your auditor/accountant on these matters.
Marked as Best Answer.
Solution
Accepted by Mini-CM (Community Manager)
March 2016

Re: Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 7
Visitor ✭ ✭ ✭
An american company is not required to charge GST/HST to its customers. Also, as far as I understand, any bill of $250 or more is required to give an GST/HST number on the bill if they are charging you GST/HST.

Canadian GST/HST and U.S. Sales Tax

N/A
# 8
N/A

I have been doing as Scott is doing but I think we are both wrong.

I have just talked to Google and was told they do not charge GST. I believe that.

Scott is correct in that almost everything is subject to GST (or HST depending on province).

Jacob is correct - a foreign company is not required to be registered to collect GST. HOWEVER, if Google does not charge GST, as a Canadian, I am required to self report and pay the GST that Google did not charge.

But since I am a business registered with GST, this would also generate an input credit so my net liability would be zero. However, an Canadian individual or a Canadian business not registered for GST is technically required to send GST to the CRA. On a physical import, the customs people would collect GST. Since Adwords is an intangible, it does not get caught that way.

To sum up, I believe a Canadian business registered for GST should record the entire Google Adwords charge as an expense and ignore GST (or if you want to be more precise, record GST and the offsetting input credit).

A Canadian business that is not registered for GST because of their size should actually be charging themselves GST on top of  the Adwords invoice and are not entitled to a credit.

 

BTW, I am not an accountant but this is how I interpret my tax obligations as a business.

Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 9
Visitor ✭ ✭ ✭

This is a matter of Import rules on HST.  If the EXPORTER is registered in Canada they will have to charge and remit HST similar to a Canadian company.  There are advantages and disadvantages to doing this, but it is not necessarily mandatory. 

 

If they are not registered, the "Place of Supply" rules kick in.  If you are not RESELLING the supply you MUST SELF ASSESS the the HST and pay out of pocket (to later get it back as an ITC...). If you ARE reselling, you need only self assess the GST on the duty, or hire a customs broker.  

 

Even though online ads are intangible, the same rules apply with a few exceptions (like custom software)

 

FROM THE CRA:

Imports

Most goods imported into Canada are subject to the federal GST, which is calculated at the rate of 5% of the duty-paid value of the shipment. This tax must be paid at time of entry and is collected at the border, unless the goods are going directly to a bonded warehouse. In this case, the GST is collected when the goods leave the warehouse and become eligible for sale in Canada.

Several provinces have combined the GST with their provincial sales taxes on various categories of goods, thus creating a Harmonized Sales Tax (HST). On most commercial imports, however, only the federal (GST) portion of the HST is applied to the sale.

To know which supplies are GST/HST taxable and at which rate, see Which GST/HST rate to charge.

Select the situation that applies to you to get more details.

 

This link is relevant to this issue:

http://www.cbsa-asfc.gc.ca/comm-eng.html 

 

Canadian GST/HST and U.S. Sales Tax

Visitor ✭ ✭ ✭
# 10
Visitor ✭ ✭ ✭

Based in the United States, I am wondering "whether state sales tax...applies"...unfortunately, I feel that "Google doesn't include tax" is not an answer to that at all.