GST/HST when your clients are outside Canada

Step 1: do you need to be registered?

You don't have to register for GST/HST while you're a small supplier. For most businesses that means your taxable sales haven't gone over $30,000 in a single calendar quarter or over the last four consecutive calendar quarters.

The detail that catches freelancers: the $30,000 includes your worldwide taxable sales, including zero-rated ones. If all your work is for US clients and you bill $40,000 a year, you are not a small supplier, even though you'd charge 0% on all of it.

While you're a small supplier and not registered, you don't charge GST/HST to anyone, and your invoices simply don't have a tax line. You can also choose to register voluntarily.

Step 2: is the service zero-rated?

CRA lists exports as zero-rated: most goods and services that would be taxable in Canada are zero-rated when they're exported. For services, that generally means a service supplied to a client who is not a resident of Canada.

Common freelance work for a foreign company usually fits: software development, design, writing, consulting, marketing and similar professional services.

Exceptions to watch

• The client, or their staff, is in Canada when you do the work with them, for example a non-resident individual you coach in person in Toronto.
• Services relating to property in Canada, such as real estate or goods located here.
• The client is actually a Canadian resident, such as a Canadian subsidiary or a Canadian branch of a foreign company. The legal entity you contract with matters, not where its parent is.

If one of these applies, or you're not sure, ask your accountant before zero-rating.

Clients in Canada

For Canadian clients you charge GST/HST at the rate for the province where the supply is made, which for services usually follows where the client is: 13% HST in Ontario, 14% in Nova Scotia, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 5% GST everywhere else (some of those provinces add their own separate sales tax, which isn't part of GST/HST).

Step 3: keep the evidence

Zero-rating is your call, so CRA can ask why you made it. For each foreign client, keep:

• The contract, and the exact legal entity and country named in it.
• The client's business address and where your invoices go.
• A short note of why you concluded the client is a non-resident, and when.
• Anything that shows where the work was performed and who you dealt with.

How Mintare handles it

When you add a client outside Canada, Mintare asks you to confirm they're not a resident and not in Canada when you perform the services, and to note your supporting evidence. It stores that with the date, zero-rates their invoices with the right wording, and shows GST/HST collected and zero-rated sales by quarter in your Books. For Canadian clients it applies the provincial rate. If you're a small supplier, it leaves the tax line off. See how it fits with how USDC income is taxed.