Along with several broader tax measures announced in the Fall Economic Statement 2020, effective for sales made on or after July 1, 2021, the following additional registration requirements for the sale of goods in Canada by non-residents who are not carrying on business in Canada have been proposed:
Non-resident vendor registration and collection obligations: Non-resident vendors that make sales of goods without the use of a distribution platform (e.g., by offering and selling the goods through their own website directly to Canadians) would also be required to register under the normal GST/HST rules if their total qualifying supplies to purchasers in Canada that are not registered for the GST/HST (e.g., consumers) exceed or are expected to exceed $30,000 over a 12-month period1.
Qualifying supplies exclude exempt or zero-rated sales and any sale of goods to be sent by mail or courier to the recipient at an address in Canada from an address outside Canada by the non-resident vendor or by another person on behalf of the non-resident vendor2. The exclusion for goods sent by mail or courier is justified by the fact that Canada Customs will generally collect the applicable GST/HST on the value of the imported goods (which are treated as casual goods) at the time of importation.
Non-resident vendors would be required to collect and remit the GST/HST on all of their sales made in Canada, regardless of whether the sale is made to a consumer or purchaser that is registered, and would be eligible under the existing GST/HST rules to claim input tax credits in respect of the tax paid on inputs used in their commercial activities, including tax paid at the border.
For more information on various provincial and federal sales tax updates, visit our Indirect Tax services page or contact a member of Crowe Soberman’s Tax Group.
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.
1ETA 211.21(2) and 240(1.5)
2ETA 211.1 – “qualifying tangible personal property”