Not related to this specific instance, but I am adding some resources from when communicating with OC while setting up my own co-operative as a fiscal host in Canada. We also do not issue receipts and treat all payments to Collectives as “unconditional donations”.
Whether Host needs to charge taxes
I can’t comment on Canada’s laws but I wouldn’t be surprised if they were quite similar to NZ. For OCNZ (a regular limited company), its legal terms (which you can feel free to copy from if it’s helpful) say that no Collective funds can be company profit, and if Collective funds are not spent by the project for any reason, we will donate them to charity. This enables us to not charge GST on unconditional donations to Collectives. But we still need to charge GST on conditional payments, i.e. when anything specific is being given in return, including event tickets. In which case, we have a feature in Open Collective where you can create contribution tiers that charge GST (e.g. selling a t-shirt, consulting services, etc). We also have that feature for EU VAT, and we can probably create it for CA VAT.
–More info available on this thread.
Based on this message, it is possible to use OC for “conditional payments” with VAT charges, but I understand that is not the current relationship between Platform 6 and Meetcoop, and as @Graham pointed out that P6 itself is not VAT registered, and it certainty does not treat payments to Meetcoop as its own revenue.
For organizations with strict record keeping needs, I think one short-path forward is to develop the reseller model. For example:
- @baybars will buy from femProcomuns (acting as Meetcoop reseller)
- femProcomuns will issue a receipt with $x + VAT charges to @baybars
- femProcomuns will pay $y to Meetcoop as an unconditional donation
Note that femProcomuns will not be able to claim back the VAT portion associated with their expense of $y as input tax credit, as with a typical vendor relationship, but I think we can design a suitable $y to make this work.
Putting this into an example. If Meetcoop suggested contribution for a tier is $10:
- femProcomuns issues a $10 + $2 VAT invoice
- @baybars pays $12 on the invoice
- under a 50/50 split, femProcomuns pays $5 to Meetcoop via OC as an unconditional donation to keep the infrastructure running
- on VAT side, femProcomuns remits $2 to tax authorities and claims no input tax credit
- on income tax side, femProcomuns is liable for income tax associated with a $10 revenue with no input expense, and I am not sure if it can claim a $5 donation that does not have a receipt
But either way, I think we can work out a revenue split that allow resellers to absorb the tax burden. To be clear, femProcomuns does not take on any additional VAT burden, but potentially an income tax burden.