If you're a Canadian freelancer sending an invoice to a client in the United States, the United Kingdom, or anywhere outside Canada, the short answer is that you almost certainly don't add GST/HST to it. Services you sell to a non-resident are zero-rated in most cases, which means the tax rate on them is 0%. There are a handful of exceptions worth knowing, and one surprising rule about the $30,000 registration threshold that catches a lot of people. Here's the whole picture.
Do you charge GST/HST to clients outside Canada?
In most cases, no. When you provide a service to a client who is a non-resident of Canada, and that service is used outside Canada, the sale is zero-rated. You invoice the full amount of your work and add nothing for GST/HST. This is how the Canadian system treats exported services under the Excise Tax Act: the government doesn't make you collect Canadian sales tax on work that leaves the country.
The default holds for the typical case, a Canadian freelancer doing design, writing, development, consulting, or similar work for a company or person based abroad. The exceptions below are specific, and if none of them apply to you, you charge 0%.
What does "zero-rated" mean?
Zero-rated means the sale is taxable, but the rate applied is 0%. For what appears on your client's invoice, that's the same result as adding nothing. The reason the distinction matters is on your side of the books.
Because a zero-rated sale is technically a taxable sale, you can still claim input tax credits, which is the GST/HST you paid on the business expenses used to do that work, and get that money back from the CRA. A sale in the "exempt" category, which is a different thing entirely, wouldn't let you recover any of that tax. So being zero-rated is the better outcome, and it's why the label is worth understanding before you file.
Does foreign income count toward the $30,000 GST/HST threshold?
Yes, and this is the part that surprises people. The $30,000 small-supplier threshold that decides whether you must register for GST/HST counts your worldwide taxable revenue, and zero-rated sales count toward it. So a Canadian freelancer earning most of their income from US clients can cross the $30,000 line and be required to register, even though every one of those invoices was charged at 0%.
You measure the threshold over any four consecutive calendar quarters, and crossing it in a single quarter triggers registration right away. The natural question is why register at all if the foreign work is taxed at 0%. Two reasons: you're required to once you pass the threshold, and once registered you can claim input tax credits on your business expenses, which puts real money back in your pocket.
When do you still have to charge a foreign client GST/HST?
The zero-rating is the default for exported services, but it has real limits. You charge GST/HST even when your client is a non-resident if any of these apply:
- The service relates to real property located in Canada. An architect, engineer, or consultant working on a specific Canadian building charges tax even when the client paying the bill lives abroad.
- The service is performed for an individual while that individual is physically in Canada.
- The service is in respect of the non-resident's Canadian branch or Canadian operations.
- The service is in respect of tangible personal property that is located in Canada while the work is done.
These carve-outs exist so that work tied to Canada doesn't escape tax just because the invoice is addressed overseas. If your work touches one of them, treat the sale as a normal domestic one and charge the applicable rate.
Which clients count as non-resident?
The client has to be a non-resident of Canada, and the work has to be for use outside Canada. A foreign-sounding company name or a payment in US dollars doesn't settle it on its own. A US parent company being billed for work that serves its Canadian branch is the branch exception above, so that one doesn't qualify as an export.
The practical test is simple: is the client a real non-resident, and is the service being consumed abroad? If both are true and none of the carve-outs apply, you're in zero-rated territory.
What records do you need to keep?
Zero-rating is a claim you have to be able to back up. If the CRA ever asks, the burden is on you to show the sale qualified, so keep the paper trail from the start:
- Proof of the client's non-resident status and their foreign address.
- The signed contract or engagement showing the foreign client and location.
- Records showing payment came from abroad.
- An invoice that shows the GST/HST line explicitly at 0%, so it reads as a deliberate zero-rating.
Keep all of it for six years, which is the CRA's standard retention period. A clearly labelled 0% line on the invoice is worth the extra few seconds, because it tells an auditor, and your future self, that the zero rate was a decision.
How to handle this on your invoices
Once you know the rule, the day-to-day is light. Show a GST/HST line at 0% on invoices to qualifying foreign clients so the zero-rating is on the record. If you're registered, your GST/HST number belongs on those invoices as well, and our guide on where to put your GST/HST number on an invoice shows exactly where it goes. Track those sales separately from your domestic ones, because you still report them, as zero-rated supplies, on your GST/HST return once you're registered, and because they count toward the $30,000 threshold you're watching. Our GST/HST guide for Canadian freelancers covers the registration side, and the amount left after tax still flows into your T2125 and your tax set-aside like any other income.
Loot keeps your invoices, expenses, and CRA categories in one place. It's Canadian, built for freelancers, and free to start.
Frequently asked questions
Do I charge GST/HST to US clients as a Canadian freelancer? In most cases, no. A service sold to a non-resident client that is used outside Canada is zero-rated, so you add 0% GST/HST and invoice only for your work. This holds unless one of the specific exceptions applies, such as work on Canadian real property or a service performed for someone while they're physically in Canada.
Does income from foreign clients count toward the $30,000 GST/HST threshold? Yes. The $30,000 small-supplier threshold counts your worldwide taxable revenue, and zero-rated sales are included. You can cross it and be required to register even if you charge 0% on all of your foreign work.
What is the difference between zero-rated and exempt? Zero-rated means the sale is taxable at 0% and you can still claim input tax credits on your business expenses. Exempt means the sale is outside the tax entirely and you can't claim those credits. For the client the invoice looks the same, but zero-rated is the better position for you.
When do I still have to charge a foreign client GST/HST? When the service relates to real property in Canada, is performed for an individual while they're in Canada, is in respect of tangible property located in Canada, or serves the non-resident's Canadian branch or operations. In those cases you charge the applicable rate as you would for a domestic sale.
What records prove a sale was a zero-rated export? Keep proof of the client's non-resident status and foreign address, the contract, records showing payment came from abroad, and an invoice that shows the 0% GST/HST line. Hold onto all of it for six years in case the CRA asks you to support the zero rate.
This is general information and not tax advice. Checked against Canada Revenue Agency guidance. For your own situation, check with an accountant or the CRA.