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GST/HST — services to US company were zero-rated

An accountant contacted me about his client, "Lisa", who worked for MyFreeCams.com, providing "interactive modelling services" of displaying herself for viewers. Her corporation had entered into a contract with MyFreeCams to provide Lisa's services.

A CRA auditor reviewed her corporation's GST/HST filing and decided that Lisa, and not her corporation, was providing the services. He further advised that since Lisa was in Canada when performing her services, the supply of her services was "made in Canada" and Lisa should be charging HST to MyFreeCams.

I provided a letter for the accountant to send to the auditor to explain that even though the supply of Lisa's services was made in Canada, it was zero-rated and thus taxed at 0%, whether it was considered supplied by Lisa or her corporation. Services provided to a non-resident of Canada are generally zero-rated unless a specific exception applies, and I showed that none of the exceptions applies. I demonstrated that MyFreeCams was a non-resident, as it was located in the U.S. and Lisa dealt with its office in the U.S.

My letter advised the auditor refer my letter to his GST/HST Technical Advisor to get proper advice. He did, and quickly abandoned the proposal to assessed Lisa for not collecting and remitting HST.

Problem solved!

(2017)