Hey there, fellow Canadian digital nomad! Let's dive into the world of GST/HST and figure out if you need to charge it on services you provide to foreign clients. It's a great question, and I'm here to help you navigate these tax waters.
The Basics of GST/HST for Digital Nomads
First things first, it's important to understand that as a Canadian, you're generally required to register for and collect GST/HST if your worldwide taxable supplies exceed $30,000 in a calendar quarter or over four consecutive calendar quarters. This applies even if you're working remotely or travelling abroad.
Good News for Services to Foreign Clients
Now, here's the exciting part for digital nomads working with foreign clients: You typically don't need to charge GST/HST on services provided to non-resident clients who are outside Canada[1]. This is considered an export of a service, and it's generally zero-rated for GST/HST purposes.
What Does "Zero-Rated" Mean?
When a service is zero-rated, it means that while it's technically taxable, the rate of GST/HST charged is 0%. So, you don't collect any tax from your foreign clients, but you can still claim input tax credits for the GST/HST you pay on expenses related to providing these services.
A Word of Caution
While this is great news, there are a few things to keep in mind:
- Client's Location: Make sure your client is truly outside of Canada. If they have a permanent establishment in Canada, different rules might apply.
- Nature of the Service: Some specific types of services might have different rules, so it's always good to double-check based on your particular business.
- Record Keeping: Even though you're not charging GST/HST, it's crucial to keep good records of your foreign clients and the services you provide to them.