finding total commission paid to Apple for claiming back sales tax on commission

Now I'm even more confused...if I look at US sales only, the difference between sales and proceeds is almost exactly 15%, so it seems I am not paying 13% sales tax on the 15% commission unless that is calculated elsewhere.

What country are you in?

My guess is that your accountant is wrong.

I'm in Canada. An online search does return results of other people discussing doing this in Canada and elsewhere. It makes sense that Apple would have to charge sales tax on their commission, same as any other business offering a service. I can claim back sales tax on all other business expenses as well of course as on the actual base cost of the expense.

Some folks even commented that they got audited when claiming as revenue just the proceeds that arrived in their bank account since the info Apple sends to the tax agency apparently has revenue as the amount before commission and then you count their commission and sales tax as an expense versus just claiming the proceeds as revenue.

Just realized as I am typing this though, the discussions I found via searching might be individual app developers, not corporate ones, so it might be that Apple doesn't charge sales tax to corporations since it would be claimed back anyway. But even then I'd like to find a document that confirms that.

My accountant is telling me I can claim back the sales tax paid on Apple's commission. In my jurisdiction sales tax is 13% so I could get 13% of the 15% Apple commission for example, so almost 2% of my total sales (15 x 0.13 - 1.95%) as a tax credit.

Are you sure that Apple paid, or was required to pay, HST on your total sales? Or only your Canadian sales?

Be very careful of mixing and matching these different kinds of sales and taxes. In Canada at least, Apple sells software to consumers. Apple charges taxes on those sales to those consumers, then reports and remits those taxes to the CRA.

That is totally separate from the income taxes that you pay to the CRA. You may be able to reclaim HST that you paid, but only if you are certain that said HST was actually payable and remitted to the CRA.

The question here is the nature of of this commission that you pay to Apple. Is this commission taxed the same way as those "digital goods" that Apple sold to Canadians on your behalf?

Back in 2021, the last time I was making any meaningful money from the App Store, Apple made a "Canada Tax on Commission Invoice" PDF available in App Store Connect. That PDF explicitly listed the HST paid on sales in Canada, much like my invoices from AWS and EasyDNS.

The tax laws were crazy complicated in 2021 and they're only worse now. They will get even worse in the near future. The only advice I can give you is to make sure you have documentation to back up any tax claims that you make. If you don't have a form that explicitly lists the HST that you paid, then you're on thin ice if you try to take that money back.

I think your accountant is wrong, but I’m far from certain as I am not familiar with Canadian tax accounting.

I’d say that Apple’s commission isn’t your business expense. You haven’t paid that sales tax, so you can’t reclaim it.

Compare with physical goods. Say you made widgets and sold them to a retailer, who added their markup and sold them on to end users. The end users pay sales tax on the retail price including the retailer’s markup. Would you expect to be able to reclaim that sales tax? I don’t think it makes sense to do that.

As you said, they remit to the CRA under my business's HST/GST account on Canadian sales.

My accountant is saying though that Apple should be charging me HST/GST on the service they provide of distributing the app globally, managing payments globally, etc. (i.e. the 15% commission). Since they provide this service for all global sales he's saying the HST/GST would apply on commission for all global sales.

So guy in France buys the subscription in the app, he pays no GST/HST but pays whatever local taxes are and Apple charges me 15% in local currency on the sale value, converts that 15% to Canadian dollars and then charges HST/GST on that amount is what he is saying.

He's saying ignore the amount of money Apple puts in my bank account as my revenue, that my revenue numbers that Apple reports to the CRA will be pre-commission and pre-sales tax on commission. I then count the commission and the sales tax on it as expenses. He says if I don't do it this way I'll get audited since the numbers from Apple won't match what I'm submitting to the CRA.

Given the complexity of this I am leaning to just counting proceeds that show up in my bank account as revenue and considering any expenses already accounted for. I don't see how I could get in trouble for doing it that way.

He's saying ignore the amount of money Apple puts in my bank account as my revenue, that my revenue numbers that Apple reports to the CRA will be pre-commission and pre-sales tax on commission. I then count the commission and the sales tax on it as expenses. He says if I don't do it this way I'll get audited since the numbers from Apple won't match what I'm submitting to the CRA.

I would be cautious about filing any tax forms based on what someone claims that some other party is filing as part of their taxes. You are responsible for your taxes, not Apple's.

My accountant is saying though that Apple should be charging me HST/GST on the service they provide of distributing the app globally, managing payments globally, etc. (i.e. the 15% commission). Since they provide this service for all global sales he's saying the HST/GST would apply on commission for all global sales.

Should be? Is that what is really happening?

Back in 2021, Apple did operate like this for sales to customers in Canada, and provided clear tax invoices documenting everything. But in 2021, the Canadian tax laws also radically changed. I'm not sure how it works today.

What you are asking about here is one very specific way of doing business. Is this HST due on payment for supply of services? If so, do you have an invoice for that payment? Or is it more like royalties?

One problem with all of this is that this little business that we're doing is quite unusual. Few people, including accountants, really understand it. It has radically changed in the recent past, and will radically change again in the near future.

Maybe you should consider contacting CRA directly and asking them. I did that back before I got my app into the Mac App Store. The CRA was quite helpful.

There is a whole long section about Canada in section 3 of exhibit B to schedule 2 of the paid apps agreement. I don’t understand it all, but this looks relevent:

(c) If You are registered for GST/HST purposes, You, by executing Schedule 2 and Schedule 3, (i) agree to enter into the election pursuant to subsection 177(1.1) of the ETA to have Apple Canada collect, account for and remit GST/HST on sales of Licensed Applications and Custom Applications made to End-Users in Canada on Your behalf and have completed (including entering its valid GST/HST registration number), signed and returned to Apple Canada Form GST506 (accessible on the App Store Connect site); and (ii) acknowledge that Apple will deduct from your remittance the applicable Canadian GST/HST and QST, based on Your address in Canada, on the commission payable by You to Apple.

Note the very last bit about “the commission payable by You to Apple”.