PREFACE:This blog post is anecdotal with references, links, and phone numbers. This should serve as a reference but does not replace the law. Consider talking to a representative associated with Canadian border law and Canadian business information to confirm the path that’s right for you. As you’ll see below, I’ve crossed the border to sell once with the information that I could scrounge together and it didn’t go as easily as representatives stated it would be. I may be making an updated article with concise references.
As a resident of Western New York state, it’s funny to think that my closest conventions are not in Pennsylvania or Massachusetts but directly north of me in Canada. For me, it’sCanfurence in Ottawa and Furnal Equinox in Toronto (but if you’re in the west and midwest of the US, don’t forget our friends at FurEh in Edmonton, Alberta, Wild Prairie Fur Con in Winnipeg, Manitoba, and VancouFur in Richmond, British Columbia!) so I figured that it was about time I attempted to expand my territory and reduce my drive time! The trouble is that the internet has plenty of sites, blogs, and other dense jargon to dig through. Rather than making it helpful, it makes the whole process of selling in Canada seem quite daunting. I’m here to tell you that a phone call or two will save you the headache and confirm the correct path based on the characteristics of your business and convention plans.
LONG STORY SHORT(sort of…)
[Since this is a brief recap of my wild goose chase, feel free to skip this part if you already feel like this topic has your head spinning! FYI: “What Crazdude Did to Prepare” section of this blog post covers the last productive call, document, and fax process mentioned toward the end.]
I started with a website(dense with information that relates to the GST/HST (Canadian goods and services tax/harmonized sales tax)) and called the 800-number in the top paragraph which connects me to theCanadian Border Service Agencywhich directed me to another number which directed me to the GST/HST non-resident information phone number specific for New York State (in Ontario, Canada) to verify if I needed to apply for a GST/HST. This last number I called was very informative and the representative laughed off the thought of me applying for GST/HST for a mere weekend-long convention. She gave me the fax number and explained where to find the RC1 documentas well as how to fill out the form in order to apply for a Business Number (BN).
SUMMARY OF MY FINDINGS
What I learned from all this? A few things. US artists selling in Canada at cons can be covered with a simple BN (and not require the more extensive GST/HST) and is predicated upon these facts:
- you are NOT a Canadian resident (you are considered non-resident in Canada’s eyes – this is the only “YES” that I selected in Part A5 of the RC1 document)
- you are traveling to sell with the purpose of Meetings, Conventions, and Incentive Travel (MCIT)
- you plan only to sell for a few days out of the year (this is temporary; you are not moving to Canada to establish a business)
- you are NOT planning to provide property or services inside Canada or export outside Canada
- you are NOT involved in rental income, supplying taxable admissions to events, or commercial ride-sharing.
- you DO NOT expect to make more than $30,000 annual revenue from worldwide taxable supplies
- you are NOT a charity organization
WHAT CRAZDUDE DID TO PREPARE
Note: Those who plan to do artist alley or otherwise complete commissions during the con weekend (placing orders, completing artwork with materials brought into Canada from the US, and hand delivering before heading back home), you may need to talk to a representative to clarify if the following process also relates to you or if you need to do additional work. I applied to claim my merchandise only. I do not bring my supplies to complete commissions at the convention.
For my purposes of selling my merchandise at Canfurence this August, I called the London-Windsor Tax services office of Canada, explained my situation, where I am from, what I’d be selling, and how long I’d be selling. London-Windsor Tax services office of Canada phone and fax info here.
- DISCUSS DETAILS TO VERIFY: The representative said that I would need a BN to ensure that my merchandise wouldn’t be held back at the border. She instructed me to find the RC1 form on the Canada Revenue Agency website. RC1 document via the Canada Revenue Agency website. (Titled “Request for a business number and certain program accounts.”)
- FILL THE FORM: She instructed me to fill out Parts A, F, and G only and then sign the last page of the document. [Note for the form: For the F2 (import/export information section) make sure to select “Meeting, Convention, and Incentive Travel”.]
- FAX THE FORM: Then I faxed this to the London-Windsor Tax services office of Canada with a note on the cover page about the urgency and date needed so that I could get the BN in time for the convention. Ideally, we should give them 30 days to process our request (I was a little late, oops!)I left B, C, D, and E blank as instructed but faxed all 7 pages just to be sure they wouldn’t hold up my application waiting for omitted pages.
- AT THE BORDER: My representative on this phone call also confirmed that upon reaching the border to get to the convention, I would need to presenta detailed spreadsheet of my inventory and my BN (once my RC1 form is processed and BN is assigned to me)to the Border agent. If you’re driving like I am: since you are claiming goods for sale, you must get in an appropriate lane to do so.
- INTO CANADA: The border agent will tax you for your ENTIRE INVENTORY on the way in (7% of total inventory price – so $1000 of inventory would be taxed $70. Plan accordingly so you are prepared to pay when you cross the border!) On the way home, you will present the border agent with an updated spreadsheet that excludes the inventory that you sold over the weekend.
- LEAVING CANADA: 7% of the inventory left will be given back to you; taxes that you don’t owe on your remaining inventory. So if you crossed into Canada with $1000 of inventory, sold half of it, you would get $35 back at the border ($500 x 0.07 = $35) from that initial $70 you paid on your ride into Canada.
- INVENTORY: My spreadsheet is set up in Google docs so that I can adjust it while at the con. It is divided into categories of product (shirts, stickers, pins) with variation descriptions (size, color, design, style, etc), quantity of each distinct product, and price. I made it so that the totals of each category could be added and so that I could calculate not only tax owed but remaining inventory and the tax on that inventory that I would get paid back on my way home. See the next section for some tips on making a spreadsheet for your inventory!
The following is an excerpt from my inventory spreadsheet below and prices are currently listed in USD. To calculate how much you owe in Canadian dollars (CAD), google the “USD to CAD exchange rate”(this value fluctuates over time.) I’m unsure if they’ll want to know all these values in CAD or if it even matters. Just to be safe, I’ll be making a CAD column before I head up for the con.(In the Sold, Remaining, and Tax return column, it is set to show that I didn’t sell anything. The Tax Total at the bottom shows that I’d be giving all the money going in and getting it all back when I leave since I haven’t actually gone to Canfurence yet… SOON!)
Description of columns:
- Price: what you charge per item
- Initial Stock: inventory you will bring to Canada. I’m using past cons as guidance but I’m bringing extra smaller items and fewer shirts and prints just to keep my inventory a little more manageable (and so the tax I pay upfront isn’t extremely high! 7% tax on multiples of $25+ items adds up fast!)
- Sold: inventory that you sell at the con
- Remaining: inventory that was not sold and will be brought back to the US
- TAXABLE: Price x Initial Stock = total taxable potential revenue – this column is what you or the border agent will use to calculate the tax Canada will take from me upon entering the country.
- TAX RETURN: Price x Remaining = unsold potential revenue. This is the revenue I did not make and will help me calculate how much $ I should get back from the agent on my way home.
Description of final rows:
- GRAND TOTAL: This is the sum of the taxable revenue and unsold revenue in their respective columns(add the subtotals marked in blue in each of the TOTAL rows for all categories under each of the two columns so Tax Total (7%) can be calculated in the last row.)
- TAX TOTAL (7%): This calculates Total Taxable revenue x 0.07 (how much Canada will take when I enter) and Tax Return x 0.07 (how much Canada will give back once I leave.)
This is all so far a work in progress; I merely did the legwork, filled the form, and got confirmation that it was received to be processed. I did all of this today (20 days before I attend Canfurence – eep!) so I hope to have an update once I get my BN, attend Canfurence, and return to the US! Stay tuned for more when I make my journey this August!
OH! And don’t forget your U.S.passport!
Wow! Two days later, I got a phone message to call a number and retrieve my 9-digit BN! I have my RC1 form from when I faxed it to the Canadian Revenue Agency so I wrote my number in the spaces for BN at the top right corner where it says “for office use only”. I will present my number at the border and bring a copy of my documents just in case.
Since I make “menus” of prices for all my commissions and merch, I had to figure out how to approach the price sheet situation a little differently. I created columns on my spreadsheet to calculate USD into CAD values. Since I’ll be at a Canadian con, I expect to take payments in CAD so I have to be prepared to communicate what is owed in CAD.
I use Square for my cash and credit card transactions and wanted to be sure it would work for me. I checked and found out that Square displays and collects funds in the currency of the country in which the account was created (for me, it’s the US so only USD.) This means I will have to have a conversion guide (and calculator); capture credit orders in USD but report to the customer what that would be in CAD.
I will also make a plan to include 7% tax rate in the prices so that the prices will count as revenue and tax will be charged on top of that (charging 107% so I make up for taxes taken at the border instead of only making 100% and letting 7% of that fly away.)
For all my US cons, I have calculated tax in Square but I think it will make it a little easier to turn off the tax function and have tax-included prices just in case I encounter an exact cash payment and don’t have time to calculate. I’ll have my USD 107% price column and my CAD 107% – USD price for entering into Square, CAD for your customer to know what they’re paying.
UPDATE 12/10/2018 – OUCH + THE END… or is it?
Whelp, I wanted to have a good update for this. I lamented since the day I went through customs about how I would do this. I wanted all my research and preparation to have resulted in a grand success and brag to my friends about how easy it is to sell in Canada by following the rules but… if I’m honest, my experience was just shy of disaster. This process devolved over four hours and looks like a shakedown:
- I came in with a presumed total sales tax owed of $300 (with chance of refund on remaining post-con inventory)…
- but after four hours of tedious documentation we got to a calculated total of $900 import taxes and fees owed
- which resulted in me sobbing and about to leave, being lead to a backroom to have a brief recap of the four hours of my attempts with the customs agent’s supervisor.
- and finally ended with a no-questions-asked-just-get-out-of-here “out” at $300 owed but without the eligibility of refund on remaining inventory.
And because I am still confused as heck as to what went wrong, here are some of the things I learned:
- RESEARCH FAIL – The phone calls and web research were no comparison to the busy and nit-picky customs agent I encountered at the border. She treated me like I had done business across country lines before. But no. I’ve not done this before. And she was too busy to barely give basic instruction upfront – it could have helped me through this nerve-wracking 4-hour experience. I had told her I was there for three days for a convention. When she asked what I was selling, I mentioned my shirts. At this point, she told me to verify the country of origin on the collar tag of each shirt. This is when I realized that my inventory printout was hardly helpful.
- INFERIOR INVENTORY– So I needed to know the Country or US state of origin for each item. I spent a good chunk of time going through my 77 shirts and adding country of origin to the inadequate inventory printout I brought with me. They wanted to know not only the quantity of items but the business cost of these items. I had calculated for RETAIL cost since I was anticipating sales tax calculations rather than calculating import tax on the pre-retail cost of the items. This was not brought to my attention until the 3rd attempt at filling out the computer-based document mentioned in the next subject. She asked why the cost went down and speculated that I made up these figures. If anything, we as business owners “make up” the more expensive retail cost in relation to business cost. Frustrating to say the least.
- OLD SCHOOL, FOOL – At my particular border crossing point, I was instructed to fill out a document on a MS-DOS computer — no mouse, no graphics, basic keyboard function, older than me, and way less fun. I spent HOURS filling this sucker out over and over because there are so many small nuances and it’s counterintuitive in nearly every way. And when you aren’t told how to do this or given the instruction manual, mistakes are bound to happen! The important thing to note (or thing that would have helped me) is that this computer will print a document once you complete the inventory by country. It doesn’t go anywhere. If you make a mistake, you can fill it out for practice or just print it where you are and start over with a fresh document. There are “Country codes” for countries and states, you have to set yourself as an importer from the “country” of the product’s origin; for my buttons I was importer of Washington State, stickers from New York State, etc. There are also codes for the kinds of product. For my buttons, the customs agent had me select “novelties” because there were over 5 different options for buttons in a clothing sense and countless jewelry codes. Novelties was close enough for her and that worked for me. I listed the cost per item and the quantity of item (or in the case of stickers, they only had units of weight by kilograms as an option which I felt was overkill [especially since I only had a handful of sticker sheets!]) I feels unnecessarily confusing because it is!
- IMPORT TAX– I was operating under the assumption that I would have to report sales tax. This is wrong. It’s an import tax (and if some of your merchandise comes from non-NAFTA countries, you’ll have to pay additional customs on those items.This is how — despite expecting to pay $300 in 7% sales tax — I was asked to pay $900 for 4% import tax + customs fees since I had shirts that were originally manufactured in over 9 different countries. [Thanks a lot, shirt companies!])
- WHY DOES EVERYONE HATE US(A)? –Thanks to the US political/trade disruptions this year, I get the feeling that these import fees (NAFTA vs not-NAFTA) had a significant effect on making my experience more tedious than necessary.
- TOO MUCH INFORMATION– I still have to verify if I was really expected to pay customs fees on shirts from other countries. As far as I’m concerned 1.) placed an order with a local US printer, 2.) to print, 3.) my art on them. The product I’m selling is the printed shirt (not the shirt fabric.) Prior to my artwork, these shirts were purchased by my printer from a supplier who purchased them from a manufacturer. (So that supply chain looks like: Customer < Me < US Printer < Shirt supplier < Shirt Manufacturer.) My products are US created since I work directly with and get billed by US companies. But of course, fear of the powers that be and legal damnation brought out the unnecessary detail-freak in me to divulge information that made this more of a headache than it needed to be. What makes me think this? They never attempted to verify my shirt origins. They never even touched my car, never asked to see the merchandise, and never asked for bills of sale.
Do with this information what you will! I’m planning to sell again in Canada in 2019 but I want to find some more information on this process to hopefully improve my future experiences. Perhaps a different border crossing point makes a difference? I don’t know! Maybe a different border point will have more help… worse help… older computers… ugh. This near-disaster happened to me — a complete import novice and natural-born goodie-two-shoes — and I think it gave me a little practice and some additional information on how to do this… better? So hopefully by August 2019, I’ll cross the border faster and with a lot less crying. *pessimistic smile and thumbs up*
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