# Canadian Indie Publishers, Kindle, Smashwords, etc. And GST



## Thorick (Feb 13, 2012)

Hey,

I've been very stumped lately, and unless I want to pay someone a bunch of money to have my question answered, I need to find it for free. This has been hard.

As an Indie publisher, we often use Kindle, Smashwords, etc. as our storefronts. These companies sell the product for us. They charge the taxes, take their cut, and give us our money.

We often use digital books, or POD to print. So our expenses are covered as we sell each book. We may have a production cost which we cover, and once covered, all money is profit.

I understand we sell a book, we collect GST. As far as I know, books are not subject to PST or the provincial half of HST in Canada. 

What I'm confused about is what to do after Kindle collects the taxes. When I submit a GST Tax form once a year they ask me to state how much I have made. I then have to state how much GST was collected. If they ever decide to question why a large chunk of GST is not collected in relation to how much was made, that may cause problems.

But it was collected, by Kindle, or any other company that sells the book or my behalf. Am I supposed to collect it again? That doesn't make much sense. Traditionally a store would by my books with GST charged. They get remitted with ITC and charge GST after they sell each book. But with Kindle we are skipping the process. They aren't buying the books from us to sell, so aren't paying me GST. They are given books free essentially and taking cut of the profits from each book sold.

So if any of the Canadian Indie Publishers have experienced this situation, please let me know how to go about it. Or I'll have to pay some expensive lawyer to answer my question for me.

Thanks


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## Rustgold (Feb 13, 2012)

You should have input tax credits.  You might have to register it for your country, or you may have a threshold where you don't need to apply; but that'll depend on your individual taxation rules.


Edit : Simple Google search on Canadian GST registration
GST Registration - How to Do GST Registration in Canada
GST/HST - Registering (Opening) your GST/HST account


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## Thorick (Feb 13, 2012)

I understand Input Tax credits. What I don't understand is GST Collected by kindle or smashwords when they sell a book or ebook. Those companies collect it, then pay their expenses to have it printed, take their cut, and send me the rest. This is still money I have made and have to declare as income on my GST tax form I have to fill out once a year. I also have to declare how much GST I collected. Because Kindle collected the GST it doesn't have to be collected again. I just want to know how I explain this on my tax form so I don't have the Canadian Revenue Agency asking me why there is a large discrepancy between money made and GST collected.


I have also checked the sites you mentioned and have registered through them, but they don't have information on this specific case. I think there must be something for this, but I am not finding it. I would like to know how Canadian Indie Publishers are dealing with this.


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## GEO777 (Nov 22, 2012)

Thorick said:


> Hey,
> 
> I've been very stumped lately, and unless I want to pay someone a bunch of money to have my question answered, I need to find it for free. This has been hard.
> 
> ...





Hi Thorick

This thread is old but I know others are finding it so I would like to answer your question.  GST/HST is ONLY required to be collected at a point of sale. Yes, each point of sale.  Here is a cut paste from  "Guide T4012, T2 Corporation - Income Tax Guide"  at  http://www.cra-arc.gc.ca/E/pub/gi/gi-065/gi-065-e.pdf  (more guides at After you register  )

"Example 3
A publisher in Ontario sells an order of historical fiction novels to a wholesaler in Ontario.
The novels are printed books for purposes of the rebate, and therefore, will be qualifying books. Because the rebate will apply to sales at any point in the distribution chain, the publisher will collect only the 5% federal part of the HST and pay or credit the rebate of the 8% provincial"  (pg 4 of GST/INFO sheet BC/Ontario link as above)

as an indie publisher pvt corporation (which is what I have)  or indie sole proprietor OR a self published author (who does not have a company)  you are not involved in a point of sale when you agree with amazon to have your intellectual property sold by them in ebook or (through createspace) a POD paperback they print up.  You are receiving ROYALTIES from them.  In amazon.ca  a book that sales for $10 of yours  will be collected by amazon.ca  and they will give you roughly 70% (depending on pricing and other things I wont get into here) and they keep the 30% AND they charge the customer the tax.  THEY are the first point of sale and tax has to be collected.   

Now if you eventually go ahead in the manner of a traditional publisher and print up your own books and you sell to a local book wholesaler (who distributes to bookstores etc)  and you get paid THAT is a point of sale and you collect tax from them.  That situation is the example above from Revenue Canada's publication.

You simply tell them in plain English and referring to the publication (and others --do a search on the cra website Canada Revenue Agency Web site -- Site Web de l'Agence du revenu du Canada)  the discrepancy is because your business both sells some books directly (ie if you have an online store or an ebay store where you sell some ebooks or printed out books of yours yourself)  AND collect royalties from business entities like amazon who are using your copyrights via a contractual agreement of author to publisher (royalty payments) when they, the contracted party, SELL one of your items.   Since THEY(amazon etc)are involved at the only point of sale  they are required from the customers to collect the tax and send it in.   

What is confusing for many new indie publishers is that they think of amazon etc as a customer. They are NOT your customer (like a book wholesaler would be to you in the above CRA example or  a bookbuyer buying from your store). Rather you are in a legal contractual agreement for profit sharing with amazon (etc) over your intellectual properties (copyrights)  and since they handle the only point of sale the onus is on them to collect the tax (and they do). Amazon.COM does this too (they have a gst number for canada).  

For you to pay hst that happens only when you directly sell an item thru your store  OR  to a distributor and HE PAYS YOU up front (a point of sale) for you to ship him some books.  You charge them hst for that point of sale. Then they turn around, up the price, and sell it to the bookbuyer and collect hst  (a 2nd point of sale, notice its not double taxing because its not the same point of sale!).


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## Thorick (Mar 4, 2014)

GEO777 said:


> Hi Thorick
> 
> This thread is old but I know others are finding it so I would like to answer your question.  GST/HST is ONLY required to be collected at a point of sale. Yes, each point of sale.  Here is a cut paste from  "Guide T4012, T2 Corporation - Income Tax Guide"  at  http://www.cra-arc.gc.ca/E/pub/gi/gi-065/gi-065-e.pdf  (more guides at After you register  )
> 
> ...




I know it has been a very long time since I have been on writingforums.com. I have finally seen this post. It is very helpful and you answered all my questions. I hope anybody else who has this same question sees this. 

Thank you so much for clearing this up for me.


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