Should you be charging and collecting GST/HST on goods sold and services rendered to foreign clients? As a general rule, goods that are exported outside of Canada and services rendered to non-residents are zero-rated under the GST/HST rules. This means that they are technically taxable, but at a rate of 0%, so you don’t have to charge anything. You can still claim input tax credits on the taxes you paid as part of producing the goods or rendering the services. While the general rule is straightforward, there are many exceptions. For example, any services that you render that relate to real estate located in Canada are taxable. For intangible property or services, the law contains place of supply rules that help to determine where a supply is considered to have been made, and therefore its tax status. It is also important to make sure you’re dealing with a true non-resident. Many foreign companies have a substantial physical presence in Canada and may be considered resident for GST/HST purposes. Some may even be registered with the Canada Revenue Agency. When dealing with new clients, be sure to find out what their status is and document your file charging the correct tax is your responsibility.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.