Does Square include HST in its fee?

[dasltd]

My accountant is asking me if Square includes HST everytime they charge their fee?

[VanKalkerFarms]

Not a tax professional and not a Canadian so 2 strikes against me :-), but since Square is charging you 2.65% to handle credit cards and the HST is minimum 5% and max 15% depending on the region, so I'd say no.  And HST is a Sales Tax not a fee from Square, you are responsible for collecting appropriate sales taxes.  

[yvanricher]

I think the problem is that the fee is taken directly on the transfer while it's quite unclear who and how to collect the taxes on the fee :

Let's say a customer pays 90.9$  and the tax is 10%. Total amount he pays is 100$.

On this transaction, Square keeps 2.65% which is 2.65$.

I receive the remaining, 97.35$ in my bank account.

When I declare my taxes, I need to say that I collected 100$, because the customer paid it to me.

So I'll have to register:

* a 2.65 transaction coming from the costumer to me,

* a 2.65 transaction from me to Square

The question is, should I include taxes in the transaction from me to Square ?

I would say yes, but I'm unsure and I feel like Square should send us a receipt to clarify that.

[AshleyK]

@yvanricher Great questions! Square does not charge or include sales tax, or any added tax, into our fees. Our fees are considered completely separate and it is up to the business owner to make sure they are charging and paying their own taxes to the correct entities. 

Part of this is because not all sellers apply tax to their credit card charges (say if it's a service, or something like that), and we cannot know what the tax will end up being for a particular seller in a particular region. The fees we take are for us, and we pay our own taxes separately from a seller's taxes. 

I would definitely continue to partner with your tax professional in this, but hopefully knowing that we do not include HST in our fees should help you work out the reporting. 🙂

[SketchedArtist]

So, to be clear.... when I input square fees (charged to me, not my customers)  into my tax spreadsheet, Square doesn't charge taxes of any kind? So, Square fees are "exempt" or "out of scope"? 

[Ellie_]

Hey there!

That is correct, @SketchedArtist. Square fees do not include any additional taxes. For the full description of those fees, we recommend taking a look at @AshleyK's response.