Preach,. Vass. I was astonished when I learned that Stripe doesn't collect HST and Substack doesn't care. I was told, by a Substack employee, "We tell people to price accordingly and get a good tax lawyer." It's like telling people who buy televisions to get a good electrician. Dude, I'm buying your TV because I figure you've built in some mechanism for changing the channels.
Maybe it's a cost-benefit analysis, and the proportion of writers in Canada earning over $30k on this platform is so small that offering more guidance/facilitating collection isn't rly worth it. Not sure! I would feel better as someone that pays for a bunch of great Substacks if the tax was broken out in my receipt. I think that being a twin has just made me sort of obsessed with fairness. Plus I like for the basics to WORK.
Hmmm... So how are Canadian Substack authors dealing with Sales Tax in the meantime? Does anyone have a link to a guide that shows how to treat it on the Stripe side? Great post.
The update is - I think this changed in March! See text below -
Hello,
We’re writing to let you know about changes to tax collection, effective June 1, 2023.
Some provinces require us to collect tax on certain Stripe products. On June 1, we’ll begin collecting GST, HST, and PST where applicable based on your business location, which you can review in the dashboard. From July onwards, we’ll provide you with a monthly tax invoice in your dashboard which will include those products you’ve used and the amounts collected. Payment processing fees are not subject to tax.
You can read more about this change on our support site. If you have any questions, you can contact us at any time via email, chat, or phone call.
This relates to Stripe charging you sales tax as a customer of Stripe and not you charging Sales Tax to your readers.
As far as I can tell (waiting on a reply from Substack support to confirm), the best way to go about this is to:
- Configure Automatic Tax calculation in Stripe with your tax registration info (e.g. Canada sales tax account numbers)
- Stripe will tack on Sales Tax to your subscription price at the transaction level for all applicable international sales taxes (the user won't realize this until their get their final transaction invoice from stripe which is not ideal).
- You will be able to export your sales tax / transaction information from Stripe
- Given that you only have to charge and remit sales tax to purchases from inside Canada as a Canadian author, you will essentially be charging more for your subscription to international readers as sales tax that does not need to be remitted will be collected...
I may be completely mistaken but that is what I have been able to gather from my research so far...
So as you may know - Stripe is how Substack collects payments - that is messaging that was sent to someone with a monetized Substack, and they shared it with me by email as a follow up to my post b/c we had chatted about how they have to parse out the sales tax themselves.
The rate of tax depends on the place of supply, so if a subscriber is from outside of Ontario (for example) they still need to pay (if the author has an HST number b/c they earn more than $30k in freelance income over a 2 month period).
I'm not sure about ppl outside of Canada, but having taxes automatically charged/collected/recorded through a third party seems preferable for authors than trying to independently charge or simply building it into their price w/o any transparency.
Echoing the other comments! As a grateful member of the $30K+ club, this has caused me way too much stress and confusion.
I think Substack should build this functionality in regardless, but I also think there's a good argument that journalistic subscriptions should be exempt from HST altogether. Seems like a simple way for gov to support the sector -- way simpler than their other programs, anyway.
I've talked to a handful of people who know what's what about this re: tax implications and each time got different advice. So...not ideal. Great post.
Preach,. Vass. I was astonished when I learned that Stripe doesn't collect HST and Substack doesn't care. I was told, by a Substack employee, "We tell people to price accordingly and get a good tax lawyer." It's like telling people who buy televisions to get a good electrician. Dude, I'm buying your TV because I figure you've built in some mechanism for changing the channels.
Maybe it's a cost-benefit analysis, and the proportion of writers in Canada earning over $30k on this platform is so small that offering more guidance/facilitating collection isn't rly worth it. Not sure! I would feel better as someone that pays for a bunch of great Substacks if the tax was broken out in my receipt. I think that being a twin has just made me sort of obsessed with fairness. Plus I like for the basics to WORK.
Hmmm... So how are Canadian Substack authors dealing with Sales Tax in the meantime? Does anyone have a link to a guide that shows how to treat it on the Stripe side? Great post.
The update is - I think this changed in March! See text below -
Hello,
We’re writing to let you know about changes to tax collection, effective June 1, 2023.
Some provinces require us to collect tax on certain Stripe products. On June 1, we’ll begin collecting GST, HST, and PST where applicable based on your business location, which you can review in the dashboard. From July onwards, we’ll provide you with a monthly tax invoice in your dashboard which will include those products you’ve used and the amounts collected. Payment processing fees are not subject to tax.
You can read more about this change on our support site. If you have any questions, you can contact us at any time via email, chat, or phone call.
— The Stripe team
This relates to Stripe charging you sales tax as a customer of Stripe and not you charging Sales Tax to your readers.
As far as I can tell (waiting on a reply from Substack support to confirm), the best way to go about this is to:
- Configure Automatic Tax calculation in Stripe with your tax registration info (e.g. Canada sales tax account numbers)
- Stripe will tack on Sales Tax to your subscription price at the transaction level for all applicable international sales taxes (the user won't realize this until their get their final transaction invoice from stripe which is not ideal).
- You will be able to export your sales tax / transaction information from Stripe
- Given that you only have to charge and remit sales tax to purchases from inside Canada as a Canadian author, you will essentially be charging more for your subscription to international readers as sales tax that does not need to be remitted will be collected...
I may be completely mistaken but that is what I have been able to gather from my research so far...
So as you may know - Stripe is how Substack collects payments - that is messaging that was sent to someone with a monetized Substack, and they shared it with me by email as a follow up to my post b/c we had chatted about how they have to parse out the sales tax themselves.
The rate of tax depends on the place of supply, so if a subscriber is from outside of Ontario (for example) they still need to pay (if the author has an HST number b/c they earn more than $30k in freelance income over a 2 month period).
I'm not sure about ppl outside of Canada, but having taxes automatically charged/collected/recorded through a third party seems preferable for authors than trying to independently charge or simply building it into their price w/o any transparency.
My accountant told me the opposite :S (that sales tax is based on place of purchase - where the buyer resides).
I agree about the third party piece though... Process should be easier/more transparent.
Echoing the other comments! As a grateful member of the $30K+ club, this has caused me way too much stress and confusion.
I think Substack should build this functionality in regardless, but I also think there's a good argument that journalistic subscriptions should be exempt from HST altogether. Seems like a simple way for gov to support the sector -- way simpler than their other programs, anyway.
Also a friend send this. - maybe the HST stuff has been debunked? Plus there is the $500 tax credit for news media but I don't think Substack counts. https://www.niemanlab.org/2022/04/canada-offered-a-tax-credit-to-encourage-digital-news-subscriptions-heres-how-its-going/
omg LOVE the policy wildcard there. PS. Need more Dad Blog
I've talked to a handful of people who know what's what about this re: tax implications and each time got different advice. So...not ideal. Great post.
It's a tricky thing! I think more ideal to have the Stripe integration automatically add on and label in receipts for people, no?
I think exactly that's it. It's so bizarre it doesn't operate that way. Downloading the problem to users is unfortunate.