Tax Question:
How does a non-resident company flow-through its goods and services tax (GST) paid on importing goods to its Canadian customers?
Facts:
When a non-resident company imports goods into Canada, most commercial goods are assessed GST and the non-resident company is required to pay GST, even if the non-resident company is not registered for GST. If the non-resident company is registered for GST, it can claim the GST paid back when it files its GST return. However, if the non-resident company is not registered for GST, it may be able to flow-through the GST paid to its customer.
If a non-resident company imports goods into Canada (which is not registered for GST) and delivers the goods in Canada to a customer who is registered for GST, the customer may be allowed to claim the GST paid by the non-resident company. In order to do this, the non-resident company must give the customer proof that it paid the GST when it brought the goods into Canada. A copy of the Canada Customs Coding Form (Form B3-3) that shows GST was paid is accepted as proof. In addition to the customs form, other documents that may be required:
The documents must clearly detail the quantity of goods purchased and that the goods were received by the customer in Canada without being used by the non-resident company. If the non-resident company can obtain the above documents, then the GST paid can be passed along to the customer. This means that the non-resident company will save money by getting the assessed GST back from the customer.
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Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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