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As a general rule, every taxable supply made in Canada is subject to Goods and Services Tax (GST). For tangible property, supply is considered to have been made in Canada if it is delivered or made available in Canada to a customer. For services, the supply is considered to have been made in Canada if it is performed in whole or in part in Canada. If you conclude that your taxable supply was not made in Canada, then there is no need to register for GST. If you conclude that your taxable supply was made in Canada, keep reading to find out if the “non-resident override rule” applies.
There is a “non-resident override rule”, which may override your requirement to register for GST under the general rule set out above. This rule provides that a supply made by an unregistered non-resident is not considered to be made in Canada unless the supply is made in the course of a business carried on in Canada:
Carrying on Business in Canada: Canadian law does not provide rules as to what constitutes carrying on business in Canada. Therefore, the only guidance offered is common law jurisprudence and administrative pronouncements by the Canada Revenue Agency (CRA).
To help you determine whether you are carrying on business in Canada, CRA was kind enough to list 12 factors that it considers in evaluating whether a supply is made in the course of a business carried on in Canada:
The CRA goes on to say that the importance or relevance of a given factor in a specific case depends on the nature of the business activity under review, and, as always, the particular facts and circumstances of each case. Based on your analysis, you will need to decide whether you have a significant presence in Canada sufficient to conclude that you will be carrying on business in Canada for GST purposes.
Conclusion: If you conclude that you are considered to be carrying on a business in Canada, you will need to register to GST purposes and will be responsible for collecting the GST on you Canadian sales. You will also be eligible to claim input tax credits for GST paid on its Canadian expenses. Note that a non-resident registering with CRA for GST may be required to provide a security deposit.
We have expertise in assessing GST filing requirements for non-residents rendering services in Canada. Contact us for a free consultation regarding your GST situation:
UHY Victor LLP Canada U.S. Tax Team