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Business

Dave Alexander
Dave Alexander
4,894 Points

Tax - What Should I Charge?

I am from British Columbia, Canada. Trying to find out what tax I should charge has been a grey area. Currently I charge only GST because I am providing a service, however, I am not sure if I should be charging PST or not? Would you consider a website a product?

I have asked my accountant, and searched the web, but again, a grey area it seems.

Thanks :)

4 Answers

I might suggest asking your accountant what his experience is with "Intellectual property" regulations. I then would consult both a legal expert as well as an accounting expert who specialize in this area. Definitions of both areas might help narrow your scope of questioning. If you can legally get away from a "product" definition and lean more towards a "consulting" definition then you might have a different approach to hand to your accountant. I'd be interested in knowing what your resulting out come is given that "consulting" crosses international boundaries if your client is elsewhere in the world where "TAXES" for such services are non-existent.

Dave Alexander
Dave Alexander
4,894 Points

Ok, thank you for your answer.

Yes, I have had a couple clients in the U.S. in which I don't charge them tax.

If I find anything out, I will be sure to post it here.

Herb Bresnan
Herb Bresnan
10,658 Points

Your tax laws seem as ambiguous as ours.
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/glssry-eng.html.
in the U.S. First of all a website is a service. A product is more along the line of the software, peripherals, and physically tangible items. You can hold a computer in your hand, but you can not hold an actual website. In the US however, there are states without sales tax, Florida is one. This is where I reside. If I were to acquire something from a state that charged tax, that state would be required by law to charge the tax to a Florida resident.
If the tax was not charged by the seller, I would have to claim the uncharged tax amount as income when I file my taxes. The IRS lets you get away with nothing. I am almost certain if you are not charging, or charging the wrong tax, the client will have to claim it as income.

Absolutly nothing against accountants, but...My advice: Don't talk to an accountant. Talk to a tax specialist. Accountants are not trained in tax law like a tax specialist is. I was a specialist for four years. In many instances the IRS laws are very grey areas, Find someone who studies these laws.