What Rate To Use?

In today’s modern era of remote work, where you can sit at your desk in one place and do work for clients thousands of kilometres away, it’s more common than ever to run into this situation: you’re billing a client who is not in your province.

So the question is—how do you charge them GST/HST?

Where The Service Was Rendered

The GST/HST rate depends on where a service is rendered. When you’re providing a service and you’re physically located in one place, while the person paying you is physically located somewhere else, the service is considered to have been rendered in the province where the payer has their permanent establishment — that is, where their business is physically located.

In practice, that means if you’re working in Ontario and the payer is located in Quebec, you charge the GST/HST rate that applies in Quebec—not Ontario.

A Primer on Participating Provinces and HST

The Harmonized Sales Tax (HST) is a combination of the federal sales tax called the Goods and Services Tax (GST) and a provincial sales tax component. In provinces that participate in the HST system, those two pieces are blended together into a single rate. Because each province sets its own provincial portion, the HST rate varies from province to province.

GST, on the other hand, is consistent— it’s a federal-level sales tax that as of this writing is 5% everywhere in Canada.

Referring to our example above, Quebec is not a participating province. That means they don’t use HST. Instead, they use GST. So a consultant working in Ontario for a company located in Quebec would charge 5% GST.

The Bottom Line: Look To Where the Payer is Located

If you are in one province and providing a service to a payer in another province, you need to look at where the payer is located. Then:

• If they are in a non-participating province, you charge 5% GST.
• If they are in a participating province, you charge that province’s HST rate.

That’s it. It’s not about where you are—it’s about where they are.

As always, if you need help navigating this or anything else related to self-employment taxes, we’re here to help. We work with clients across the country, and we’d love to help you get this right. Get in touch.