taxes, canadaI’m looking to start an online business where tour companies will list their adventures (wine tours, white water rafting, etc.) and customers will be able to easily book these tours online. I am in the very early stages of planning, researching, and just figuring things out.
One thing that has stumped me is how to handle charging tax. For example, if a customer who lives in Alberta books a British Columbia tour online, are they charged BC tax (12%) or AB tax (5%)? And to go even further, if a US customer books a Canadian tour, what tax is applied?
I’ve tried to look into it but it’s a little tricky - it’s not just charging the tax of where I operate the business from, because that’s not necessarily where the actual tours that the customers are paying for are located.
Does anyone have any experience or knowledge with this?
Thanks!
I’m providing an answer based on my own experiences in this area (working with the travel industry at an in business level but not specifically offering travel related services) - very generalised.
It will depend on your own business model: I consider 3 models for selling tours, a. full travel agent- this is where you (your business) is charging the customer the full amount for the tour - 100% tour cost goes through your business -
b. partial Travel agent - You are only charging the customer a percentage of the total tour cost and the customer pays the owing amount direct to supplier at later date only a percentage of the tour cost goes through your business
a and b are considered operating as a “travel agent” there will prob be laws in your country about your operation and requirements as travel agent etc.
c. tour Advertiser. - this is where you are not operating as a travel agent and you might be invoicing the supplier direct for sale leads - simple example - a website directory of tours that charges the supplier a 20% commission on sale for the click through.
in short:
Model A - you would prob (depending on your local laws) charge the customer only the related tax specific to your business location. - your supplier would be invoicing you their tax requirements (under their location) (B2C)
Model B - you would still prob charge the customer only tax related to your local area. the remaining tax owning (supplier location tax) is paid later by the customer direct to supplier. (B2C)
Model C - You are invoicing the supplier direct for “services” as above you are prob charging the specific tax to your local business location. (B2B)
Somebody might be able to clarify a bit better , do you know what business model you will be operating?
ultimately if you are unable to obtain an answer here the best bet would be speaking to a travel industry expert specificity regarding your business model.
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