MicrostockGroup Sponsors


Author Topic: Contributor update about tax  (Read 12111 times)

0 Members and 1 Guest are viewing this topic.

outoftheblue

« on: January 31, 2017, 03:46 »
0
Message from Canva:

Quote
Hi ____,

Canva is no longer the small business we were in previous years. The time has come for us to start doing things that established businesses do, like withholding taxes.
Most of you will be familiar with this process from your other relationships in the industry. There are a few minor differences with Canva because we operate out of Australia, but the process is much the same: we will withhold a portion of your royalties and pay them to the Australian Tax Office, and youll need to claim them back via your own tax authorities in your country.
A key difference is that Australian law requires that we withhold tax on global sales, not just domestic sales as is the case with US-based companies.
The amount depends on the tax treaty between your country and Australia, but is not more than 30%.
The process is automatic from your end - you dont have to do anything. Weve already recorded your country, but let us know if what we have for you is not accurate:
Our records show youre registered in UK.
See here for the list of Australian tax treaties and applicable rates of withholding.
Were starting the withholding from January 1, 2017, so your next payment will be the first affected. We realise this is late notice, and apologise for that, but if youd like to discuss your options just reply to this message and well sort it out together.
Weve also updated our Contributor Agreement to reflect these changes. (Last paragraph)
If you have any questions about any of this, just reply to this email and well get back to you as soon as we can.
Cheers,
Lee
« Last Edit: January 31, 2017, 03:52 by outoftheblue »


outoftheblue

« Reply #1 on: January 31, 2017, 03:49 »
+1
First news in the morning, they inform us that they will withhold taxes.

Also, the 10% rate for the United Kingdom in their table seems wrong to me.
It should be 5% based on current treaty:


Quote
UK/ AUSTRALIA DOUBLE TAXATION CONVENTION
SIGNED 21 AUGUST 2003
Entered into force 17 December 2003
Effective in United Kingdom from 1 April 2004 for corporation tax, from 6 April 2004 for income tax (other than taxes withheld at source) and capital gains tax and from 1 July 2004 for taxes withheld at source.
Effective in Australia from 1 April 2004 for fringe benefits tax and from 1 July 2004 for withholding tax on income derived by non-residents and other Australian tax on income or gains.

ARTICLE 12
Royalties
1 Royalties arising in a Contracting State and beneficially owned by a resident of
the other Contracting State may be taxed in that other State.
2 However, those royalties may also be taxed in the Contracting State in which they
arise, and according to the law of that State, but the tax so charged shall not exceed
5 per cent of the gross amount of the royalties.


Excerpt from here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/496636/uk-australia-dtc_-_in_force.pdf
« Last Edit: February 01, 2017, 03:15 by outoftheblue »

« Reply #2 on: January 31, 2017, 04:07 »
+1
"Most of you will be familiar with this process from your other relationships in the industry. There are a few minor differences with Canva because we operate out of Australia, but the process is much the same: we will withhold a portion of your royalties and pay them to the Australian Tax Office, and youll need to claim them back via your own tax authorities in your country. "

On the contrary :  we are not familiar with the process of withholding tax, because ALL other agencies do NOT withhold tax from contributors living in countries with tax treaties.  This means WE (the contributors) have to fill out forms every year, for every agency, but no money is withheld.

The letter gives me the impression that Canva plans to do the very opposite :  (1) withhold taxes, even if there is a double taxation treaty with your country. (2) We do not have do fill out forms or send anything to Canva (3) Canva will have to do a lot of paperwork to prove for every contributor, on an annual basis, which taxes have been withheld (4) Contributors in tax treaty countries should add these Canva documents to their annual tax documents and the paid amount will be deducted.
Lee, please correct me if I am wrong here?

In my case (Belgium), this would mean Canva will withhold 10% - the Belgian taxes on Royalties are 15%, so I will have to pay 5% on Canva income and 15% on all other royalties.

Now my question is :  why do it the opposite way?  I would say (from the point of view of Canva) it's less work for the agency to let us do the paperwork and withhold nothing?

outoftheblue

« Reply #3 on: January 31, 2017, 04:13 »
+4
On the contrary :  we are not familiar with the process of withholding tax, because ALL other agencies do NOT withhold tax from contributors living in countries with tax treaties.  This means WE (the contributors) have to fill out forms every year, for every agency, but no money is withheld.

I noticed that too.

But I did some google searches and it seems that's the way Australia works, not just Canva:
https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Australian-income-of-foreign-residents/Withholding-from-royalties-paid-to-foreign-residents/

However it's a huge burden for all of us.

Canva, why don't you increase our rate from 35% to at least 38% as a way to compensate?
Or relocate to USA? Most of us - and most of your buyers too - are NOT Australian.

« Last Edit: January 31, 2017, 04:20 by outoftheblue »

« Reply #4 on: January 31, 2017, 04:17 »
+1
How I understand it:

For the US-based agencies we have to fill out a form to get the withholding rate according to the double taxation agreement relevant for our country. If we don't fill it, we will get taxed with 30%.

As Canva is Australia based, things work differently. We don't need to fill out anything, they will withhold the rate corresponding to the correct tax agreement.

And I would expect to get some kind of documentation at year end about the amount of taxes payed, which I can use when doing my tax return.

outoftheblue

« Reply #5 on: January 31, 2017, 04:21 »
0
How I understand it:

For the US-based agencies we have to fill out a form to get the withholding rate according to the double taxation agreement relevant for our country. If we don't fill it, we will get taxed with 30%.

As Canva is Australia based, things work differently. We don't need to fill out anything, they will withhold the rate corresponding to the correct tax agreement.

And I would expect to get some kind of documentation at year end about the amount of taxes payed, which I can use when doing my tax return.

That's how I understand it too. But a foreign tax return definitely complicates things.

« Reply #6 on: January 31, 2017, 04:31 »
0
How I understand it:
For the US-based agencies we have to fill out a form to get the withholding rate according to the double taxation agreement relevant for our country. If we don't fill it, we will get taxed with 30%.
As Canva is Australia based, things work differently. We don't need to fill out anything, they will withhold the rate corresponding to the correct tax agreement.
And I would expect to get some kind of documentation at year end about the amount of taxes payed, which I can use when doing my tax return.

That's how I understand it too. But a foreign tax return definitely complicates things.

It would only complicate things for us if we do not receive the necessary paperwork from Canva (or not in time for the tax return deadline in our country).   You may be right that this is "the Australian way", but I just checked the Australian/Belgian treaty and it says Australia MAY withhold 10%.  The word MAY (as far as I understand English) means Australian companies have the choice to withhold or not?

outoftheblue

« Reply #7 on: January 31, 2017, 04:38 »
0
It would only complicate things for us if we do not receive the necessary paperwork from Canva (or not in time for the tax return deadline in our country).   You may be right that this is "the Australian way", but I just checked the Australian/Belgian treaty and it says Australia MAY withhold 10%.  The word MAY (as far as I understand English) means Australian companies have the choice to withhold or not?

When I say 'complicate things' I mean this:
https://www.gov.uk/tax-compliance-checks
Not that I have something to hide, but I wouldn't like to invite HMRC to my home anyway.
I am sure all revenue services in the world would like to investigate tax returns, as it's one of the possible ways to evade taxes.

'MAY': Not sure if it's up to every company to decide (but of course I hope you are right).
I understand that your country - and my country - think that Australia 'may', but Australia decided that they 'can' and 'will'.





« Last Edit: January 31, 2017, 04:49 by outoftheblue »

« Reply #8 on: January 31, 2017, 05:05 »
0
I would assume that may, in this instance, would be dependent upon whether Canva meet a certain set of criteria or not. It won't be a matter of their choice.

Mir

« Reply #9 on: January 31, 2017, 05:39 »
0
Bad surprise for me - 30%

« Reply #10 on: January 31, 2017, 05:42 »
0
I would assume that may, in this instance, would be dependent upon whether Canva meet a certain set of criteria or not. It won't be a matter of their choice.

You could be right.  Anyway, I have no problem with this, as long as Canva sends us the necessary paperwork in time in January 2018. 
And as for the post by Outoftheblue :  I have already had nice visits from the Belgian Revenue Service (twice), Belgian VAT and Belgian social security service since I started microstock in 2006 and I've never had any problem whatsoever  (beside a huge raise in my blood pressure and heart rate for at least a week haha).

outoftheblue

« Reply #11 on: January 31, 2017, 05:53 »
0
And as for the post by Outoftheblue :  I have already had nice visits from the Belgian Revenue Service (twice), Belgian VAT and Belgian social security service since I started microstock in 2006 and I've never had any problem whatsoever  (beside a huge raise in my blood pressure and heart rate for at least a week haha).

Nice to know that all ended well for you. I pay all taxes too, so I guess I have nothing to fear, but I never had a visit and the raise in blood pressure is what I wish to avoid.

« Reply #12 on: January 31, 2017, 06:03 »
+3
$0.35-30%=$0.245 in my case, so I'm out of there! This is less than the $0.28 from IS, the absolute bottom I swallowed but for 20 times bigger volume of sales.
I don't contribute to any other agency withholding tax from every single sale!

« Reply #13 on: January 31, 2017, 08:25 »
+3
And my Italian accountant will love another set of tax stuff written in English.....

« Reply #14 on: January 31, 2017, 09:22 »
+2
The part that concerns me is

You do not need to complete any forms, but you do need to keep us informed about your country of registration. And the end of each Australian tax year (June 30) we will send you a document listing the tax withheld that you can use to claim credit from the tax authorities in your country.

That doesn't coincide with the tax year for the USA - so I'm not sure how we are going to report this.

So in April 2018 I'll have a document showing only 6 months of withholding.
Then in April 2019 I will have a document showing the withholding for half of 2017 and half of 2018?

The costs for the extra tax forms my accountant is going to have to fill out will probably negate the refund I'll get for claiming the tax payments.

« Reply #15 on: January 31, 2017, 10:40 »
+1
$0.35-30%=$0.245 in my case, so I'm out of there! This is less than the $0.28 from IS, the absolute bottom I swallowed but for 20 times bigger volume of sales.
I don't contribute to any other agency withholding tax from every single sale!

Not so easy to get out of there as any images that a user has included it in a design prior to the time it is removed will still be available to download indefinitely.  For example, two of mine, which were deleted in July 2015, were sold in October 2016.

« Reply #16 on: February 01, 2017, 02:51 »
0
Did all of you received this mail? I didn't get anything...yet..

« Reply #17 on: February 01, 2017, 09:24 »
+4
It will be a shame if Canva can't be competitive with sites from other countries that have 0% withholding tax.  I hope they can find a way around this.

« Reply #18 on: February 01, 2017, 10:53 »
+2
Yeah 30% taxation is really a lot. They should compenstae with those who have 30% taxation with a raise or sth. Because getting only 70$ instead of 100$ is just too much. And just when I thought January was my best month. It sucks.

« Reply #19 on: February 01, 2017, 14:08 »
+1
It's * a huge loss for me, canva was one of my top 3 best sellers, and 30% is just insane. The bad thing, it seems they wont solve this issue, at least i have that impression after received reply on my concerns. BTW, do anybody know agencies with the same business model as canva?

« Reply #20 on: March 30, 2017, 10:37 »
0
So, all those, that received payment yet, how much did Canva take for taxes? Any info on that?

Mir

« Reply #21 on: March 30, 2017, 12:45 »
0
So, all those, that received payment yet, how much did Canva take for taxes? Any info on that?
It's different depending on where you live.

« Reply #22 on: April 04, 2017, 13:46 »
0
Yeah 30% taxation is really a lot. They should compenstae with those who have 30% taxation with a raise or sth. Because getting only 70$ instead of 100$ is just too much. And just when I thought January was my best month. It sucks.

if this is withholding for taxes you pay in your country then it really doesn't make much difference - the 30% will be deducted from other taxes you owe. 

SpaceStockFootage

  • Space, Sci-Fi and Astronomy Related Stock Footage

« Reply #23 on: April 04, 2017, 15:05 »
+1
It's when it's withholding for taxes in other countries that can be an issue. If your country has a double taxation treaty with the country that is withholding tax, then you should be able to offset if against what you owe in your own country. You're pretty much out of luck if you live in a tax free country though, or there's no double taxation treaty.

« Reply #24 on: April 04, 2017, 15:58 »
0
It's when it's withholding for taxes in other countries that can be an issue. If your country has a double taxation treaty with the country that is withholding tax, then you should be able to offset if against what you owe in your own country. You're pretty much out of luck if you live in a tax free country though, or there's no double taxation treaty.

Very true.  In the US you can just file it as credit for a foreign tax paid, but if in a country without a tax treaty that wouldn't work. 

Are there countries with no income tax?  I know some US states don't have income tax but didn't know about any countries.


 

Related Topics

  Subject / Started by Replies Last post
3 Replies
2162 Views
Last post May 06, 2009, 08:20
by tan510jomast
1 Replies
1735 Views
Last post October 07, 2012, 15:47
by beau_nash
6 Replies
2369 Views
Last post December 14, 2012, 08:18
by JPSDK
8 Replies
3003 Views
Last post February 27, 2013, 14:22
by dirkr
74 Replies
17815 Views
Last post January 17, 2017, 11:14
by Jafo2016

Sponsors

Microstock Poll Results