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Taxes for Canadian Business Drop Shipping from USA


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Gday fellas. Ok heres my layout. I live in Canada. My website is going to be based in USD dollars. Im drop shipping with a company for which is located in the USA so all shipments come from the USA.

 

Im a little uclear how taxes would work in this situation? Im thinking that it doesnt matter where Im actually located, since all shipments start in the USA. So should I just treat it as a US based business?

 

Any insight into this would be greatly appreciated.

 

Thanks guys.

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My non legally binding answer would be that you would have to charge PST to customers in the province you are located in, GST for most of the rest of Canadian customers, HST to customers in the East and No Tax to customers in the USA. You need to contact the PST and GST offices though and get the correct information from them in writing. Without it being in writing if they do happen to give you the wrong information you are still liable for all the tax you should have collected.

 

You might also want to contact a US Tax Lawyer because you might be liable for US tax and have to charge it if the drop shipper is in the USA, but I don't think this is the case. Best to find out for sure before you start your business.

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My non legally binding answer would be that you would have to charge PST to customers in the province you are located in, GST for most of the rest of Canadian customers, HST to customers in the East and No Tax to customers in the USA. You need to contact the PST and GST offices though and get the correct information from them in writing. Without it being in writing if they do happen to give you the wrong information you are still liable for all the tax you should have collected.

 

You might also want to contact a US Tax Lawyer because you might be liable for US tax and have to charge it if the drop shipper is in the USA, but I don't think this is the case. Best to find out for sure before you start your business.

 

thanks for the reply. I'll take your advice and make some phone calls. Thanks for the starting point though.

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  • 3 months later...
thanks for the reply. I'll take your advice and make some phone calls. Thanks for the starting point though.

 

 

So what did you find out? I am in the same situation as you are, and if you have already been able to find out the answer, it would certainly save me some time on the phone.

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