I'm preparing to sell my e-book on Sublime Text very soon. Part of that is building the online checkout module.
I was hoping to just use a simple solution where I only needed to ask buyers for a credit card and their email address. Since it's an online download / virutal product, I didn't think I needed to collect addresses from users.
So, as I'm setting this up, I was wondering about HST. With regular goods and services, you charge Canadians the destination HST/GST rate. I bill Ontario customers 13% HST, Alberta Customers 5% GST and out-of-country customers 0%. But how does this work when you are selling something online and planning not to collect addresses? Whoever buys the e-book might be from Ontario, they might be from somewhere else in Canada or they might be from outside the country.
So, I called up the CRA and asked them what to do in this situation. Lucky for me I was able to get a tech-savvy person on the other end that was extremely competent in his job. Because the good will be usable in Canada (Canadian can read the book), I will need to follow regular HST charging practices. So, I would need to collect the home address of every single person who buys my book. Arg.
So my next question was:
No. Asking someone isn't enough proof of where they live. It won't hold up in an audit.
Well, then..
No, because users can spoof an IP. Still not good enough...
If I really don't want to collect billing information from everyone who buys the book, I would have to charge Canada's highest possible tax rate to every single customer, regardless of if they live in Canada or not. This is the 15% tax rate of Nova Scotia.
So, it looks like I'll have to collect the addresses and charge the customer's provinces HST/GST rate. Out of country customers will pay nothing in taxes.
Not the solution I wanted to hear, but I'm glad to find this out now rather than down the road.
Hope this answers a few questions!
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All my posts are available to edit on Github. Any fix, little or small, is appreciated!