* Why do Canadians pay GST and PST or HST taxes on services paid in US funds? Print

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Question: Strange question but how can you charge me CDN taxes on US funds? If the services are US based and US currency based they should be tax free - yes or no?


that is a great question and one I agonized over a lot. I asked Revenue Canada about this and ....

Here are the facts.

1) Our services are Canadian based - our web servers and business offices are in Kelowna, British Columbia, Canada.

2) We are a Canadian business doing business in Canada - therefore we need to collect and pay taxes as per Canadian law. Only Canadians need to pay GST and PST because they live in Canada. Everyone else in the world does not have to pay Canadian taxes on our services.

3) Currency is just a measure of value and a common agreed to value for services rendered.

4) 95% + of my clients are American or international from over 160 different countries in the world that we do business with. Canadians are a very small percentage of our client base.

5) Most people in the world don't even know what a Canadian dollar is worth but they all know what they pay for a US dollar so we use the US dollar as the measure of exchange to better serve over 95% of our clients.

6) Even if I collect payments from Canadians in US dollars I need to collect taxes at Canadian % rates on those US dollars and then submit the taxes collected (converted to Canadian equivalent amounts) to the Canadian governments.

I hope that helps to clear up your question - again - that is a great question.

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