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We are providing software and consulting services to Canadian company, for use in Canada. Is any sales tax due and how is it remitted?

Full Question: We are developing software which will be used by a Canadian company in Canada. We will also be providing consulting services to the same company. Do we have to charge any type of tax to the Canadian company and if so, what kind and how is it remitted?

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Answer:

Diane Yetter photoThe determination as to whether you need to charge Canadian taxes on the transaction will depend on whether you establish a presence in Canada that meets the threshold for collecting tax. The rules in Canada are very fact dependent and are different than those in the United States. If you are doing all the work in NJ and not traveling to Canada, then you will not have an obligation to collect any of the Canadian taxes. The customer will have the obligation to remit the GST and any applicable provincial taxes (HST, QST or PST) directly. If however, you are providing the services in NJ, then the obligation to register and collect taxes may apply. This should be reviewed with a Canadian tax specialist.

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