A big question that arises for folks who collect GST/HST comes down to invoicing: when you do charge GST? Or is it supposed to be HST? Why do I have a customer asking me not to charge sales tax?
(Looking for a general discussion of GST and HST? Like…when and how you’re supposed to register to collect it? Check out the GST and HST page on ArtistProducerResource.com.)
Place of Supply
This can be a funny rule to wrap your head around—made even more complicated by the fact that we’re now all working in the digital world, with many clients and customers farther away from us than ever before (while we ourselves stay closer to home than ever before...three cheers for #PandemicLife).
CRA uses the term “place of supply” when determining which rate of sales tax to charge. This means that you charge the GST or HST rate based on the location where you are supplying your product or service. So you may be handcrafting that macramé in your basement suite in Toronto, or hosting that Zoom consultation from your home office in Vancouver, but what counts is where your product or service is being consumed.
An easier way to think of it is: where are you sending your invoice (i.e. what is the business address of the person who’s paying you)? If you’re invoicing a company located in Quebec, you charge the 5% GST in place in that province. Sending your product to a customer in New Brunswick? You charge them New Brunswick’s 15% harmonized sales tax. (See below for a table of which rates to charge in what province.) If you have an out-of-province client telling you not to include sales tax on your invoice, they’ve got that wrong: if you are registered to collect GST/HST, you need to do so, you just need to insure you’re charging the correct rate according to the province of supply. As detailed in the table below, the only instance in which you would not charge sales tax is if you’re invoicing internationally.
A helpful way to understand the “place of supply” rule is to think back to that fabled time when we could all gather together. (You know, back when we used to physically go places to experience a performance?) If an Alberta resident purchased a ticket to see a play at Tarragon Theatre, they’d pay 13% HST on that ticket because Tarragon is located in Ontario—not 5% because the person purchasing the ticket is visiting from Alberta.
The Complicating Factor
What makes things tricky in the online world is that now, thanks to *official pandemic sponsor* Zoom, we’re able to host events and invite people into our space—whether it’s for online classes, workshops, or performances—and those people could be consuming what we’re offering from pretty much any location. You’re unlikely to be gathering your meeting guests’ mailing addresses and sending them individual invoices, so in this kind of scenario, CRA states that you would charge the sales tax rate of where you are located. However, if you are hosting a one-on-one session with someone, like a vocal lesson, you would charge sales tax based on the location of that individual (e.g. if you’re based in Newfoundland and offering a vocal lesson to someone in Toronto over Zoom, you charge Ontario’s 13% HST).
The first question to ask yourself is whether you’re sending an invoice for your service or product—and if you are, easy, just follow the Place of Supply rules. For example, if a company in Manitoba is paying you to host a workshop for 50 people on Zoom who could be tuning in from wherever, you charge Manitoba’s 5% GST—you are getting paid by one person/company whose business address is in Manitoba (rather than getting paid individually by workshop registrants), and that trumps the fact that the Zoom participants are located from all over.
For more information and examples from the CRA, check out:
GST/HST Rates Across Canada
The rate for taxable supplies depends on the province or territory. As of February 10, 2021, the rates are:
Got Questions?
If you are a performing artist working in Canada and have further questions, please contact us by emailing info@generatorto.com and we will consult with you at our next Financial Joy Office Hours session. Please note that at this time we are not able to offer support to folks working outside the performing arts.
