Tuesday, September 27, 2011

MAILING to the US - Is there GST on postage? Yes or No?

ALL packages sent to the United States ARE NOT exempt from GST.
HOWEVER- MOST ARE, OR CAN BE EXEMPTED FROM TAX.
DON'T PAY MORE TAX THAN YOU HAVE TO!

The relevant tax information is clearly spelled out at the Canada Post website:
http://www.canadapost.ca/business/tools/pg/manual/b05-e.asp#39032

''Tax rules relating to items mailed to foreign destinations and Canadian Forces Post Offices are as follows:
not subject to sales taxes if the total price per transaction is $5.00 or more;
if less than $5.00, subject to GST and QST if mailed from Qubec, HST if mailed from New Brunswick, Nova Scotia or Newfoundland and Labrador, and GST only if from mailed the other Provinces and Territories.''

THESE ARE THE SAME RULES SINCE GST CAME INTO EFFECT.
AFTER 15 YEARS, YOU'D EXPECT CANADA POST EMPLOYEES TO GET THEM RIGHT.
SADLY, MOST EMPLOYEES DO NOT UNDERSTAND THE CORRECT APPLICATION OF APPLICABLE TAXES.

Since 1991 there has always been GST on shipments to the US (and outside Canada) where the postage applied is valued UNDER $5.oo.
So, if you are sending a SINGLE item, and the postage is less than $5- there is GST ( QST if sending from Qubec), or HST if applicable, ADDED to the total value of the postage applied.
The GST/HST exemption for posting packages OVER $5 is in order to allow fair gepetition with courier gepanies, or so they claim!
As most shipping tools treat each package as a SINGLE transaction, you would be charged tax according to the value of that SINGLE transaction. Even if each SINGLE transaction TOTALS OVER $5.oo.
This is similar to the rules when making a purchase in a ''vending machine''. Each ELECTRONIC transaction is treated as if it were an individual purchase, in and of itself, considering nothing else. While not appearing fair, it appears to be the correct application of the GST rules, and regulations.This problem could be possibly solved, if each item were added together, and the tax applicable only charged ONCE on the cumulative total. Or NOT CHARGED, as applicable!

HOWEVER- when a number of items are taken to a Post Office the CUMULATIVE value of the postage, if over $5, makes each of the individual items exempt from GST or HST! (see Canada Post's rule regarding this above. Maybe printing a copy will help explain this to a postal clerk. GOOD LUCK!!!)


Make sure that if you apply some of the postage yourself, and need to purchase some additional stamps- like for the Fuel Surcharge, that these additional stamps ARE EXEMPTED if applicable- i.e. the TOTAL APPLIED POSTAGE IS OVER $5. It is the CUMULATIVE value of ALL the "POSTAGE APPLIED" that matters, not just the stamps you purchase. Almost every postal employee gets this one wrong- even at a UNIONIZED Federal Post Office! Watch out for this error!
Make the most out of the postage you pay. Save the tax(es) where possible. Accumulate your mail being sent out of Canada until it exceeds the $5 threshold. DON'T PAY MORE TAX THAN YOU ARE OBLIGATED PAY! It is your right to only pay the taxes that are required- NOT MORE. And that's the law!

JUST FOR FUN- on another tax topic:
In Ontario these ''vending machine'' tax applications leads to some pretty strange situations. A $1 can of Coke, when purchased as part of a meal gebo, under $4, is exempt from provincial tax= though GST is applied. However, if that same $1 can of Coke is purchased from a vending machine, it is taxed with both PST and GST- even if you immediately purchase a $2 muffin from another vending machine. The muffin is only taxed with the GST, and no PST, as it is exempt, being in itself under $4.
(I have published an another okay Guide, regarding the application of GST on Mail-in Rebates.)

Conversely- there is also a rule when buying items in bulk, even if the individual item is not taxed, as it is below a certain threshold. It's gemonly called the ''M

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