Online Tax Strategies, July 2018−What South Dakota v. Wayfair, Inc. Means For Your Business’ US Sales

The Supreme Court of the United States has just made a landmark ruling that will reshape Sales and Use Tax compliance for Canadian businesses selling into the United States.

Before South Dakota v. Wayfair, Inc.

Previously, states could not impose sales and use tax registration or collection obligations on a business if the business had no physical presence in the state (for example: a place of business, inventory, equipment, sales staff, independent agents, contractors, technicians). States could provide for a minimum threshold of sales for registering; however, they could not force a business to register based solely on a business’ volume of sales if they did not have any physical presence.

These precedents were established long before the rise to prominence of internet sales, when the closest equivalent was catalogue sales (see National Bellas Hess v. Department of Revenue, 386 U.S. 753 (1967), Quill Corp. v. North Dakota, 504 U.S. 298 (1992)) However, recently states have grown increasingly frustrated with the loss of tax revenue and have been challenging these precedents on the basis that they are outdated and were formulated at a time that does not square adequately with today’s economic reality.

For more information, download the document below.

Next article

Jean Gaouette
Partner | CPA, CA | Assurance

Are you at a stage where you want to ensure your business’s growth? You will need financing to make it happen.

It’s important to prepare yourself properly before meeting with a financial lender so you can put all chances on your side to obtain the desired financing.

28 Jun 2018  |  Written by :

Jean Gaouette is an assurance expert at Raymond Chabot Grant Thornton for the Magog office. Contact...

See the profile

Next article

Adviser alert − June 2018

The Grant Thornton International IFRS team has published the 2018 version of the IFRS Example Interim Consolidated Financial Statements, which has been revised and updated to reflect changes in IAS 34 Interim Financial Reporting (IAS 34) and other IFRS that are effective for the year ending December 31, 2018.

In particular, they reflect the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers, which are effective for annual accounting periods beginning on or after January 1, 2018.

The Interim Financial Statements illustrate a six-month accounting period beginning on January 1, 2018. They are based on the activities and results of Illustrative Corporation Ltd. and its subsidiaries (the “Group”) – a fictional consulting, service and retail entity that has been preparing IFRS financial statements for several years. The Group produces half-yearly interim financial reports in accordance with IAS 34 on June 30, 2018.

Next article

No sooner does the final bell for the school year ring than thousands of young people start wondering how they’ll spend their summer.

For older students at CEGEP or university, summer is generally the time for a job and the chance to make a bit of money.

For the younger ones, summer usually means having fun. Many will go to summer camp (day, sports, science, arts and crafts or music camps) with a full day of supervised activities. Wherever they go, the costs could mount up, especially if the child is away from home for one or more weeks.

From a tax perspective, summer camp costs are similar to child care costs. They entitle the parents to a tax benefit, either as a deduction for federal purposes or a refundable tax credit for Quebec purposes. Let’s take a closer look at these rules.

Federal benefit

The federal benefit is a deduction that generally reduces the income of the lower-income parent. To give entitlement to the deduction, the eligible child care costs cannot be greater than either of the three following amounts. You should remember though that the deduction cannot be greater than two-thirds of the income earned by the parent claiming it:

  • $8,000 per child aged six and under at the end of 2018 (born in 2012 or after);
  • $11,000 per child with a severe and prolonged impairment;
  • $5,000 per child between the ages of 7 and 16 (over the age of 16 for a child with a disability).

Since summer camp costs are added to annual child care expenses, eligible expenses are limited to these three amounts.

Quebec benefit

Quebec has opted for a refundable tax credit at a rate that is based on the parents’ family income. The credit rate varies between 36% and 75% and can be claimed by either parent, regardless of who actually paid the costs. Eligible costs are similar to those that qualify for federal purposes, subject to the following two exceptions: there is no limit on earned income and the eligible annual amount for a child aged six and under is $9,000.

Overnight summer camp

What may not be as well understood are the rules regarding the applicable limit when a child goes to an overnight camp. When the child stays overnight, the eligible weekly costs are significantly reduced. The previous age-based limits do not apply. The following amounts apply and give entitlement to the federal deduction and the Quebec refundable tax credit:

  • $200 per week per child aged six and under;
  • $275 per week per child with a severe and prolonged impairment;
  • $125 per week per child between the ages of 7 and 16 (over the age of 16 for a child with a disability).

Advice

For federal purposes, child care expenses may sometimes be deducted by the higher-income parent, for example when the spouse is a full-time student or is hospitalized.

Even if you have no tax payable, in Quebec, you can obtain a refund for your credit entitlement, whereas for federal purposes, the deduction can only be used to reduce taxable income and not for a refund.

This article was published in French in Journal de Montréal and Journal de Québec on 2018, June 20th.