Non-Resident
Importer: Managing
your tax responsibilities
Register for the GST/HST and become
more profitable
There’s a great opportunity for U.S. companies to increase
their profitability and be more competitive by expanding
their business into Canada. The best way to achieve this is to
become a Non-Resident Importer (NRI). If becoming an NRI
is something you’re considering, there are a few things you
should know about Canada’s tax system – specifically when
it comes to registering for the Goods and Services Tax and
Harmonized Sales Tax (GST/HST).
It enables you to conduct all of your CRA business with
a single contact. You can register your business, open
additional accounts, make changes to your accounts (e.g.
address changes), and inquire about account balances and
recent payments. Your business number will also act as
your GST/HST number.
First things first – you’ll need a business
number
GST is a federal tax that applies to most goods and
services in Canada at a rate of five percent. Some
provinces have harmonized their provincial sales tax with
the GST to create the HST. Those provinces are:
•Ontario, New Brunswick, and Labrador and
Newfoundland at a rate of 13%
•Nova Scotia at a rate of 15%
•Prince Edward Island at a rate of 14%
•The province of Quebec applies Quebec Sales Tax (QST)
at a rate of 9.975% in addition to the GST. The QST is
calculated on the sale price of the good excluding the
5% GST.
The Canada Border Services Agency (CBSA) and Canada
Revenue Agency (CRA) interact with all businesses through
business numbers. A business number is required before you
can begin importing into Canada. Your customs provider can
apply for a business number on your behalf.
A business number provides you with one number that applies
to the four main CRA business accounts:
•Corporate income tax
•Payroll deductions
•GST/HST
•Import/export
1 Tax information for Non-Resident Importers
What is the GST/HST?
GST is applied at the border to all imported commercial
goods destined or supplied to all Canadian provinces. The
GST is calculated on the value of the goods (including the
value of any customs duties) and is collected by CBSA on
behalf of CRA.
HST is applied at the border to all imported non-commercial
goods destined or supplied to the provinces of Ontario, New
Brunswick, Nova Scotia, British Columbia and Newfoundland
and Labrador.
Do I have to register for the GST/HST?
Even though you may not have a permanent establishment
in Canada, you may be considered to be “carrying on
business in Canada”, in which case, you’d be required to pay
GST/HST if your worldwide revenues are more than $30,000
CAD.
If you choose not to register for GST/HST, you’ll still be
required to pay GST to Customs when importing your
goods. A non-registrant is not legally allowed to collect GST,
however you should include the GST/HST in the selling price
as a cost (GST/HST must not be shown as a separate line
item on the commercial or Canada Customs Invoice).
You can get more detailed information about business
numbers and GST/HST from CBSA’s website at
www.cbsa-asfc.gc.ca.
While it may seem complicated, taking your business across
the border doesn’t mean you’ll be stuck wading through
Canada’s tax requirements and processes on your own. Your
customs broker can help you with the GST/HST registration
application process, and offer assistance in maintaining your
books and records, as well as the calculation and preparation
of your tax returns.
If you do register for GST/HST, you’ll need to collect it from
your customers on behalf of the Government of Canada.
(The GST/HST should be indicated as a separate amount
on the commercial invoice.) However, you’ll also be able to
claim an input tax credit to recover the GST/HST and put
that money back towards your bottom line.
Contact your Livingston account executive
e-mail us at solutions@livingstonintl.com
or give us a call at 1-800-837-1063
Visit www.livingstonintl.com
2 Tax information for Non-Resident Importers