Post a new topic
    3 Replies Latest reply on Dec 1, 2009 9:19 PM by shipwire

    VAT in Canada

    sluman Newbie
      I am in the US and have been selling occasionally in Canada for a few years, and my customers have been charged duties, customs clearance fees, etc. on several occasions from 3rd parties such as ups. It takes forever and costs a fortune to sell to Canada on an item by item basis.

      To simplify things for them, I have contracted with a Canadian fulfillment company where I will ship 50-100 units at a time to them. Then when a Canadian places an order with me, I can pass on the mailing address to the Canadian company to ship the order. So far so good.

      My problem has to do with VAT. How much VAT do I need to charge? And when/how do I pay the VAT to the Canadian government? My product will sell for $35 + $8 s/h, and my cost is about $10/unit + about $8 s/h. Any guidance would be appreciated.
        • Re: VAT in Canada
          LUCKIEST Guide
          VAT in Canada, Welcome to this web site,

          Hope the following helps

          Value added tax (*VAT*), or goods and services tax (*GST*), is tax on exchanges. It is levied on the added value that results from each exchange. It differs from a sales tax
          because a sales tax is levied on the total value of the exchange. For
          this reason, a VAT is neutral with respect to the number of passages
          that there are between the producer and the final consumer. A VAT is an
          indirect tax,
          in that the tax is collected from someone who does not bear the entire
          cost of the tax. To avoid double taxation on final consumption, exports
          (which by definition, are consumed abroad) are usually not subject to VAT and VAT charged under such circumstances is usually refundable.

            • Re: VAT in Canada
              sluman Newbie
              Thanks for the response, but I'm not sure I have a complete answer yet.

              I failed to mention. I sell printed materials like posters, that are printed from 3rd parties, which I bundle up and sell with other printed materials. I really thought a VAT came into place in this situation.

              If I do not have to charge a VAT, and therefore I don't have an obligation to pay one either, then what kind of tax do I need to charge Canadians? Surely, their government wants a piece of the action. I mentioned the prices and cost because someone previously advised me to report the value to be less than $20, and you would not have any liabilities whatsoever. Or another way to get around it is to value the item lower and then to tack on a hefty shipping and handling charge. This seems like an easy red flag for a governmental taxing agency to catch, but does any of this make sense?

              Also, can you direct me to a website that details this sort of transaction and the required procedures? Thanks
                • Re: VAT in Canada
                  shipwire Wayfarer
                  First it is likely you are dealing with GST in Canada (another word for VAT) . VAT is the rest of the world. Sales Tax is the U.S.

                  You pay VAT/GST at the point of transaction.

                  You have two transactions here.
                  1) Import = transaction. You are likely paying GST and Duties when you bulk ship into Canada. You owe the Tax difference between your supplier cost and your import wholesale cost + Duties
                  2) Sale = transaction. Here you will charge GST on the sale price and get a recoupment for what you already paid.

                  Get a bookkeeper. We have a few in our partner network that can give you a quote.

                  Here is an Guide to import into Canada with links to all the GST/VAT/Duties and business questions.


                  If your other order fulfillment company has fallen down on the job...consider giving us a call.

                  Shipwire product ecommerce order fulfillment
         (free trial)
                  Warehouses in U.S., Canada and Europe/UK