Canadian Sales Tax Regulations for eCommerce Sellers
In Canada, any business or company is obligated to collect sales taxes in case if they are: –
Setting up a business in Canada (i.e. If the company is in Canada, using Canadian warehouses, infrastructure, having some physical presence, etc.)
Not a small supplier (defined as having sales over CAD $30,000 in the last four quarters)
If the company is Selling taxable supplies (most goods and services fall under this category; limited exceptions include medical services and supplies, toll/fairy charges, daycare services, etc.)
In Canada, the sales taxes are divided into two categories: The Provincial and the Federal. Depending on the place of business and service or product delivery what type of taxes are to be collected is determined.
Post registering yourself for sales tax accounts in Canada you can also claim Input Tax Credits (ITC) on sales taxes that you paid on your expenses. This is specifically done to prevent the accumulation of sales taxes along the supply chain.
If you are running your eCommerce online store on Magento, then it is very important for you to set up the tax rules and rates as per Canadian Tax regulation. Knowing this pain of the eCommerce store owners on the Magento platform we have given stepwise guidelines below to set up and configure GST and PST taxes in Magento 2.