After a great question from @gregheo and another call to the CRA, I’ve made a change to the “Filing HST for an App Company in Canada” article from a few months ago. The confusion came from the fact that there are two distinct ways to sell something with no tax: zero-rated sales (i.e., “taxable at the rate of 0%“) and “tax exempt” sales. Both involve charging no tax on your product, but one’s for alpacas and whatnot, and the other is for international app sales. Long story short, all your App Store sales should be going into Line 101, not just the Canadian ones.
@leakywellington for line 101, I always included all revenue rather than Canadian source only. Have I been doing it wrong?
— Greg Heo (@gregheo) April 28, 2016
Nope, Greg, you’re totally right! Thanks for shining a light on this.
So, what does this mean for past HST forms? As it turns out, not much. I asked the CRA representative and it seems like the tax reviewers just use it for context: if your sales numbers are through the roof—but you only charged $1.00 in HST—then it tells them something may be awry. Basically they use it to help see if you made any mistakes. This means that any past Line 101 mistakes will likely have minimal/no effect on your taxes, but always good to be accurate to help avoid an audit.
Standard disclaimer: I’m not an accountant, just someone who’s gone through this a few times. Please share any feedback/suggestions/corrections below!