Sales Taxes -> GST/HST -> GST or HST alternate collection method (ACM) for direct sellers
Direct Sellers - Alternate Collection Method (ACM)
Direct sellers can get approval from Canada Revenue Agency (CRA) to use the Alternate Collection Method (ACM), which is a simplified method for collecting the GST or HST.
Direct sellers are organizations that sell their exclusive products to distributors or independent sales contractors (ISCs) who solicit orders and sell the products to consumers. Examples are Tupperware, Avon, Norwex, etc.
2 important points, from CRA's GST/HST Memoranda Series 14.1 Direct Sellers:
Supply for less than suggested retail price
Supply for no consideration or nominal consideration, and appropriation for own use
Network sellers rules can be used upon approval by CRA. When these rules are in use, any commissions or bonuses paid to sales representatives would not be subject to GST/HST, and would not be included in a calculation to determine if the sales representatives are small suppliers.
These rules can be used even if the seller is an approved direct seller for the purposes of the ACM. In order to use the network sellers rules, the network seller must have jointly elected with each of its sales representatives before applying to use the rules, and this election must also be made with persons who become sales representatives while an approval to use the network sellers method (NSM) is in effect.
Revised: September 19, 2017
Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved. See Reproduction of information from TaxTips.ca