Indirect taxes are broadly based on transactions which can include sales, purchases, imports, exports and payroll. Liability will arise regardless of profitability. Businesses in Canada often pay more in sales and other indirect taxes than they pay in income tax. Failing to account for these taxes correctly can have a significant impact on your enterprises’ business costs and cash flows.
Canada operates within a complex sales tax system. While some provinces operate with the harmonized sale tax (HST) regime which harmonizes between federal and provincial sales taxes, others operate with two systems in parallel: the federal goods and services tax (GST) and the provincial sales taxes (PSTs). This regional variation makes it difficult for both domestic and foreign corporations to comply with the Canadian sales tax systems.
Non-residents not carrying on a business in Canada for income tax purposes may yet be considered carrying on a business in Canada for HST/GST purposes. If that applies, the Canada Revenue Agency (CRA) requires the non-residents to register for and collect GST/HST, despite of the fact that the CRA does not provide definitive guidance on the registration process. To further complicate matters, the CRA has increased enforcement by conducting more assessments for uncollected GST/HST that results in penalties and interest for non-resident companies.
Payroll taxes for employers include premiums for Canada pension plan (CPP)/Quebec pension plan (QPP), employment insurance (EI), Ontario employer health tax (EHT) and workplace safety and insurance board (WSIB).
To help your enterprises to reduce costs, minimize risk and at the same time increase confidence that no refund opportunities have been missed, we can assist you to:
- navigate through the complex indirect tax systems in Canada
- implement and manage a financial reporting and return submission process which will ensure the accuracy and completeness of the indirect tax amounts collected and paid
- consider the broader impact of indirect taxes on your enterprises
- structure major transactions to manage indirect taxes to enhance the cash flow of your enterprises
- design, test and review billing or point-of-sale systems
- undertake indirect tax due diligence
- manage indirect tax audits, disputes and resolutions
- take corrective actions such as voluntary disclosure to address non-compliance concerns
- provide training to employees
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