CRA Place of Supply Rules: What Tax to Charge Out-of-Province Clients
Once you register for a GST/HST number, billing local clients is simple: you charge the sales tax rate of your home province. But what happens when an Ontario freelancer bills a client in British Columbia, Alberta, or the United States? To stay compliant, Canadian sole proprietors must master the CRA Place of Supply rules.
The Golden Rule
For professional services, the sales tax rate is determined by the physical billing address of your client (the recipient), not your location. Your home province's tax rate does not follow your invoices across provincial borders.
1. Charging Sales Tax by Province
If you are registered for GST/HST and perform services for a client in another Canadian province, you must apply the sales tax rate of the recipient's province. Let's break down what to charge based on your client's billing address:
| Client Province | Tax Type | Rate to Charge |
|---|---|---|
| AB, NT, NU, YT | GST Only | 5% |
| BC, MB, SK | GST on custom services. Provincial tax is separate and does apply to some services: BC taxes software and legal services now, SK taxes a listed set. | 5% |
| Quebec (QC) | GST, plus QST if you are QST-registered | 5% + 9.975% |
| Ontario (ON) | HST | 13% |
| Nova Scotia (NS) | HST | 14% |
| NB, NL, PE | HST | 15% |
For example, if you are an Ontario freelancer (13% HST) billing a client in Calgary, Alberta, you charge only 5% GST on their invoice. If you are a BC freelancer (5% GST) billing a client in Toronto, Ontario, you must charge 13% HST.
2. US and International Clients: The Zero-Rated Rule
If you provide creative, technical, or consulting services to clients outside of Canada (such as a US startup or a UK agency), your services are classified as zero-rated exports (taxed at 0%).
- No Sales Tax: You do not add GST, HST, or foreign sales tax to their invoices. It is good practice to annotate the invoice with a line such as “Zero-rated export — 0% GST/HST” so the tax treatment is clear if CRA reviews your records.
- ITCs still apply: Even though you charge 0% tax, zero-rated sales are still considered taxable supplies. This means you can claim your business expenses (software, home office, hardware, etc.) as Input Tax Credits (ITCs) to recover the GST/HST you paid.
How to report on your GST/HST return
On CRA's current electronic return, zero-rated export revenue is reported on Line 91 (the line for exempt supplies and zero-rated exports), not on Line 101 which is an older field name. Your taxable sales made in Canada, including any zero-rated domestic supplies, go on Line 90. If you mix domestic and export revenue, you will have amounts on both lines.
Nuance: zero-rating conditions
Most remote professional services to non-resident business clients qualify as zero-rated under the ETA. However, there are exceptions — for example, services physically performed in Canada, or certain services connected to Canadian real property. If your engagement is complex or involves work done on-site in Canada, confirm the classification with an accountant before invoicing.
3. What About Provincial PST (BC, SK, MB, QC)?
Sole proprietors are often terrified that they will have to register for provincial sales taxes (like BC PST, SK PST, MB RST, or QC QST) when billing out-of-province clients.
The answer depends on what you sell. BC publishes a real exemption for custom software: software “developed solely to meet the requirements of a specific person” can be bought exempt from PST by the person it was built for, and work performed on software (testing, installing, configuring, modifying, repairing or restoring it) is not taxable either. Software that is not custom is taxable at 7%, and BC counts SaaS, infrastructure as a service, APIs and web hosting as software. BC also taxes legal services today, and adds accounting, architectural, engineering and geoscience, non-residential real estate and security services on October 1, 2026.
For work BC has not listed, such as marketing consulting or copywriting, BC has not published an exemption either. Those services are simply not on its taxable list today, which is a weaker thing than an exemption and a list that has changed twice in the last two years. You are usually only required to collect the federal GST portion (5%), though Quebec QST can still apply if you are QST-registered. Read the province’s own bulletin for your line of work rather than assuming a service is outside PST.
Software is not the exception, it is the taxable case
If you sell pre-packaged software, digital downloads, or SaaS subscriptions rather than custom software, BC taxes that at 7% today. BC counts SaaS, infrastructure as a service, APIs and web hosting as software, and PST applies wherever the server sits so long as the customer uses it on a device ordinarily situated in BC. The $10,000 figure often quoted here is BC’s small-seller test, and it is measured on your gross revenue from all retail sales of eligible goods, software and services over the previous 12 months, counted across every business you run and including sales made outside BC. It is not a test of your sales to BC residents alone.
4. Audits: The Importance of a Billing Address
If the CRA reviews your sales tax filings, they will want to see why you charged 5% GST to a client instead of your home province's 13% or 15% HST.
To satisfy an auditor, you should include the recipient's physical business address directly on the invoice. Listing a US or out-of-province name without their physical location gives the CRA room to deny the place-of-supply classification and retroactively charge you the difference out of your own pocket.
Automated Invoicing with NorthOS
You shouldn't have to memorize tax tables to send an invoice. When you enter a client's address into NorthOS, our invoicing system automatically applies the correct CRA Place of Supply rules, calculating the exact GST or HST rate for you in a fraction of a second.
Disclaimer: This guide is for informational purposes only. Place-of-supply classifications can depend on specific contract terms. Confirm your invoicing tax structures with the CRA T4002 or a certified tax accountant.