- 0%GST/HST on most services you supply to a non-resident client (zero-rated)
- CountsZero-rated sales still count toward the $30,000 small supplier limit
- ITCsYou can still claim input tax credits on the costs of making these sales
Usually no: 0%
If you're registered and your client is a non-resident of Canada, most services you supply are zero-rated: GST/HST applies at 0%, so you add none to the invoice. The exceptions include work done for a person while they're in Canada and work on property located in Canada. Zero-rated sales still go on your GST/HST return and count toward the $30,000 limit.
Freelancers with American clients ask this all the time, often while being paid in US dollars. The answer comes from the CRA's export rules for services, set out in GST/HST Memorandum 4-5-3.
This page assumes you're registered for GST/HST. If you're not registered yet, you don't charge GST/HST to anyone, but your foreign sales still count toward the $30,000 small supplier limit.
Zero-rated is not the same as exempt
A sale to a foreign client is usually zero-rated. That's a taxable sale with a 0% rate, which is different from an exempt sale.
Why the difference matters. Zero-rated sales keep your input tax credits. If most of your work is for foreign clients, you charge little or no GST/HST but can still claim the GST/HST you pay on business costs. That can mean a refund on your return.
Does the 0% rule cover your client? Three questions
The CRA's general rule zero-rates a service supplied to a non-resident of Canada, unless the service falls into one of the excluded types. These three questions catch the exclusions freelancers run into most.
- Question 1
Is your client a non-resident of Canada (not a Canadian company, and not dealing with you through an office in Canada)?
No It's a Canadian sale. Charge GST/HST at the rate for the place of supply.
Yes Go to question 2.
- Question 2
Is the work rendered to someone while they're in Canada, or is your client an individual who's in Canada when they deal with you?
Yes The general 0% rule doesn't apply. The CRA's example: training a foreign company's staff while they're in Canada.
No Go to question 3.
- Question 3
Is the work about real property in Canada, or goods located in Canada when you do it?
Yes Generally not zero-rated. This covers things like repairs, appraisals, construction and real estate services.
No See the result.
- Result
Generally zero-rated: charge 0% GST/HST. A few service types (acting as an agent, transportation, telecom) have their own rules. Advisory, consulting and professional services are covered by a separate rule with similar exclusions.
Examples: usually 0%, and the traps
- Usually 0% Remote services such as design, writing or development for a company in the US with no office in Canada, as long as none of the exclusions above apply.
- Usually 0% An advertising service for a non-resident that isn't registered for GST/HST under the normal rules.
- Usually 0% A digital product (such as a download) sold to a non-resident who isn't registered under the normal rules and isn't in Canada when they buy it.
- Not under the 0% rule Teaching or coaching a foreign client's people while they're in Canada.
- Not under the 0% rule Work on goods or a building located in Canada, even when the owner lives abroad.
- Not under the 0% rule A US company that deals with you through its office in Canada. The CRA treats it as resident for activities carried on through that office.
Getting it wrong costs you, not your client. Deciding whether a sale is zero-rated is your responsibility. The CRA can assess you for the GST/HST you didn't collect if you zero-rated a sale in error. When you're unsure, ask the CRA for a ruling.
Keep proof your client is a non-resident
The CRA expects you to check that the client is a non-resident before you zero-rate the sale, and to keep evidence on file.
- A contract or engagement letter naming the foreign business as your client. The CRA looks at who the contract is actually with. Work contracted by a Canadian subsidiary is a different case.
- The client's full address on your invoices.
- A signed statement that the client isn't resident in Canada. Memorandum 4-5-1 gives sample wording.
- For digital products sold online: the CRA generally accepts the customer's own declaration plus another check, such as comparing the billing address or using geo-location.
How it shows up on your GST/HST return
A zero-rated sale still goes on your return. If you file online, it's reported apart from your Canadian sales:
- Line 90Taxable sales made in Canada, including zero-rated sales made in Canada. Don't include zero-rated exports here.
- Line 91Zero-rated exports, plus exempt and other sales.
- Line 103GST/HST you collected or were required to collect. A 0% invoice adds nothing here.
- Line 106Input tax credits on your business costs, including costs of making zero-rated sales.
- Invoice to a US company (zero-rated)
- $4,000
- GST/HST on it at 0%
- $0
- Invoice to an Ontario client
- $2,000
- HST on it at 13%
- $260
- Revenue counted toward the $30,000
- $6,000
- GST/HST collected (line 103)
- $260
US clients still count toward $30,000
The small supplier limit counts your worldwide taxable sales, including zero-rated ones. So a freelancer whose clients are all in the US can still go over $30,000 and have to register.
Already over the limit? See what to do if you went over $30,000 and didn't charge GST/HST. For your Canadian clients, the GST/HST calculator works out the tax by province.
Tracking it
Record each invoice with the rate that applied: 0% for a zero-rated foreign sale, your client's provincial rate for a Canadian one. Then you can see both your GST/HST collected and your total revenue for the $30,000 test.
Mixing Canadian and foreign clients? Log each invoice at the right rate
The Canada Self-Employed Income, Expense & GST/HST Tracker is a spreadsheet for Excel and Google Sheets. The Income tab lets you override the GST/HST rate on any row, for example 0% for a US client, and the Summary totals income and GST/HST collected for each month. One-time price, $19 CAD, instant download.
Get the tracker: $19 CAD What's insideFor the rest of the routine, see how to track GST/HST as a freelancer.
FAQ
Do I charge GST/HST to US clients?
Usually not. If you're registered and your client is a non-resident of Canada, most services you supply to them are zero-rated, so GST/HST applies at 0%. Exceptions include services rendered to a person while they're in Canada and services relating to real property or goods located in Canada.
Do sales to US clients count toward the $30,000 small supplier limit?
Yes. The limit counts your worldwide taxable sales, including zero-rated sales. A freelancer with only US clients can still go over $30,000 and have to register.
Can I claim input tax credits if most of my sales are zero-rated?
Yes. Registrants can claim input tax credits for the GST/HST paid on purchases used to make zero-rated sales, subject to the usual rules. That's the main difference from exempt sales.
What if my US client has an office in Canada?
A non-resident with a permanent establishment in Canada is treated as resident for the activities carried on through that establishment. The CRA also looks at who the contract is actually with. If you deal with the Canadian office or subsidiary, it's generally a Canadian sale.
Is it different for clients in Europe or elsewhere?
No. The rule depends on whether the client is a non-resident of Canada and on the type of service, not on which country they're in.
I sell digital downloads to customers abroad. Do I charge GST/HST?
Generally not, if the customer is a non-resident who isn't registered under the normal GST/HST rules and isn't in Canada when they buy. For online sales, the CRA generally accepts the customer's declaration plus another check, such as the billing address or geo-location.
Sources
- CRA: GST/HST Memorandum 4-5-3, Exports – Services and Intangible Personal Property
- CRA: GST/HST Memorandum 4-5-1, Exports – Determining Residence Status
- CRA: Guide RC4022, General Information for GST/HST Registrants
- CRA: Type of supply (taxable, zero-rated or exempt)
- CRA: When to register for and start charging the GST/HST