HST on clients outside Canada: zero-rated exports for Ontario freelancers
Designing, coding or consulting for clients outside Canada? Many of those services are zero-rated: taxable at 0%, so you charge no HST. But that income still counts toward the $30,000 registration limit, and it changes whether the Quick Method suits you. Here is how CRA’s rules work, with a worked example.
Estimate the HST on your Canadian sales
Last reviewed October 2026 · Educational information, not tax advice.
What “zero-rated” means
CRA’s Guide RC4058 defines zero-rated supplies as supplies that are taxable at the rate of 0%: “there is no GST/HST charged on these supplies, but GST/HST registrants may be eligible to claim input tax credits (ITCs) for the GST/HST paid or payable on property and services acquired to provide these supplies.” Many services an Ontario freelancer supplies to a client who is not a resident of Canada fall into this group. CRA’s GST/HST Memorandum 4-5-3, Exports – Services and Intangible Personal Property sets out the rules.
Which services to non-residents are zero-rated?
Memorandum 4-5-3 describes two main provisions that fit most freelance work:
| Provision | What it covers | Main exclusions |
|---|---|---|
| General rule (section 7 of Part V of Schedule VI) | A supply of a service made to a non-resident person, for example design, development or writing work | The client is an individual who is in Canada when they deal with you, or the service is rendered to an individual while in Canada; services in respect of real property in Canada or goods in Canada; advisory, consulting or professional services (see the next row); acting as the client’s agent; transportation, postal and telecommunication services |
| Advisory, consulting or professional services (section 23) | Advisory, consulting or professional services made to a non-resident person, for example IT consulting | Litigation in Canada after it has started (services rendered to an individual); services in respect of real property in Canada or goods in Canada at the time; acting as the client’s agent |
CRA’s imports and exports page adds that a supplier does not charge the GST/HST on services performed totally outside Canada, and lists other zero-rated services for non-residents, including services made in Canada and provided to a non-resident person by electronic means, and advertising services provided to a non-resident person who is not registered for the GST/HST.
The memorandum gives an example of how the “individual in Canada” exclusion works: training given in Canada to the employees of a non-resident company is not zero-rated under the general rule, because the service is rendered to individuals while they are in Canada.
Keep proof that the client is a non-resident
Zero-rating depends on facts about your client, so keep the evidence. Memorandum 4-5-3 says: “It is the supplier's responsibility to determine whether the supply of the service is zero-rated and to maintain sufficient evidence to support that determination. The CRA may assess a supplier for uncollected GST/HST (whichever is applicable) if the supply was zero-rated in error.” Contracts, the client’s business address, invoices and correspondence help. CRA explains how it decides residence in GST/HST Memorandum 4-5-1, Exports – Determining Residence Status.
A client with a foreign address is not automatically a non-resident: a non-resident with a permanent establishment in Canada is deemed resident in Canada for the activities carried on through that establishment, and a Canadian-incorporated company is deemed resident. Memorandum 4-5-1 also shows a signed certificate of non-residence that CRA will generally accept as evidence. If you are not sure, ask a qualified tax professional or CRA GST/HST Rulings.
Zero-rated sales still count toward $30,000
Zero-rated does not mean exempt. CRA’s small supplier test counts your worldwide taxable supplies, and zero-rated supplies are taxable supplies. So income from clients outside Canada counts toward the $30,000 limit over four consecutive calendar quarters, even though you charge them no HST. Our guide to the $30,000 small supplier rule explains the timing. RC4058 counts zero-rated supplies the same way for the $400,000 Quick Method limit.
How export income changes the Quick Method
RC4058 lists zero-rated supplies and supplies made outside Canada as supplies that are not eligible for the Quick Method calculation, and says not to include revenue from supplies on which no GST/HST was charged on line 101. The Quick Method rate applies only to your HST-taxable sales to Canadian clients.
The trade-off is input tax credits. Under the Quick Method you can claim ITCs mainly for capital assets such as computers, and for real property. Under the regular method, a registrant can generally claim ITCs on the HST paid on business expenses, including expenses for zero-rated work. A freelancer with mostly foreign clients collects little HST but may pay a fair amount, so the regular method can work out lower.
Example: a designer with Canadian and US clients
An Ontario freelance designer bills $40,000 to US companies with no presence in Canada (zero-rated) and $20,000 to Ontario clients in a year. The designer pays $8,000 plus $1,040 HST on business expenses. These are assumptions for illustration.
| Line | Amount |
|---|---|
| Taxable sales for the $30,000 test ($40,000 + $20,000) | $60,000: must register |
| HST charged to Ontario clients (13% × $20,000) | $2,600.00 |
| Quick Method: 8.8% × $22,600, less 1% × $22,600 | $1,762.80 to remit |
| Regular method: $2,600 collected, less $1,040 ITCs | $1,560.00 to remit |
Here the regular method is $202.80 lower, because the Quick Method gives up the ITCs on expenses that also support the zero-rated work. With different numbers the answer can change, so run your own figures.
Frequently asked questions
Do I charge HST to a client in the United States?
Often not. CRA Memorandum 4-5-3 says a supply of a service made to a non-resident person is zero-rated under the general rule unless an exclusion applies, and advisory, consulting or professional services to non-residents can be zero-rated under section 23. Exclusions include services rendered to an individual while in Canada and services in respect of real property or goods in Canada.
Does income from clients outside Canada count toward the $30,000 small supplier limit?
Yes. Zero-rated supplies are taxable supplies at 0%, and CRA counts worldwide taxable supplies, including zero-rated supplies, for the $30,000 test over four consecutive calendar quarters.
Do zero-rated exports go on line 101 under the Quick Method?
No. RC4058 lists zero-rated supplies and supplies made outside Canada as not eligible for the Quick Method calculation, and says not to include revenue from supplies on which no GST/HST was charged on line 101.
Can I claim input tax credits for expenses related to foreign clients?
Under the regular method, generally yes: CRA says registrants can claim ITCs for the GST/HST paid on purchases and expenses related to zero-rated goods and services. Under the Quick Method, ITCs are limited mainly to capital assets and real property.
Sources
- CRA GST/HST Memorandum 4-5-3, Exports – Services and Intangible Personal Property
- Canada.ca, GST/HST on imports and exports
- CRA Guide RC4058, Quick Method of Accounting for GST/HST
- CRA GST/HST Memorandum 4-5-1, Exports – Determining Residence Status
- Canada.ca, When to register for and start charging the GST/HST
Rules and thresholds are taken from the CRA pages above. CRA can change them, so check the source before you rely on them.