Plan contractor hiring in Canada

Contract with the exact sole proprietor or corporation that will issue the invoice, and put the scope, price, invoice trigger, currency and due date in the service agreement. For status, record where the contract was formed, which law its interpretation clause chooses, where the contractor works and whether the buyer operates in a federally regulated industry. CRA usually uses formation to choose the Quebec or outside-Quebec factors unless the contract says another law controls interpretation. The Canada Labour Code covers listed federal industries; other work must be checked under the standards of the province or territory of work. The buyer's offshore address decides none of these points. Keep them in the onboarding record so a move, replacement contract or operating change triggers a fresh review.

Sources: Canada Revenue Agency, Sole proprietorship, Canada Revenue Agency, Personal Services Business, Canada Revenue Agency, Employee or Self-employed?, Government of Canada, federally regulated industries and workplaces

If the line is crossed

Reclassification can make the offshore buyer a Canadian employer even though it has no Canadian place of business. CRA states that such an employer retains the responsibilities assigned to Canadian employers for a Canadian-resident employee. The response can include a payroll program account, employee identity and tax-credit forms, income-tax deductions and remittances, and T4 reporting, with the exact pension, insurance, Quebec, and province-of-employment branches checked separately. Canada Pension Plan coverage for an employer without a Canadian place of business is optional through Form CPT13. Employment standards add local consequences. For Ontario work covered by its Act, the employee can recover unpaid entitlements and the employer may face a notice of contravention, a penalty, prosecution, or both.

Sources: Canada Revenue Agency, Employers' Guide for payroll deductions and remittances, Ontario Ministry of Labour, Employee status

Written non-resident status certification

Customer certification for exported-service zero-rating

This signed customer statement gives the Canadian contractor evidence that the contractual recipient is non-resident for GST/HST purposes. CRA's Appendix A provides wording for a non-resident business through an authorized individual, including the business's legal name and complete address, the signer's name and title, and an undertaking to report a residence-status change. It supports section 23's non-resident-recipient condition and should sit with the service agreement. It does not establish that the work avoids the Canadian-property, Canadian-litigation, or agency exclusions, so the service scope and use facts need their own record.

Issued by: Signed by an authorized individual for the foreign customer and retained by the Canadian contractor.

Timing: Obtain it before applying the 0% rate and ensure it is dated, signed, and effective when the supply is made. Refresh it after any residence-status change.

Sources: Canada Revenue Agency, Exports and residence status

Form CPT1

Request for a CPP/EI Ruling, Employee or Self-Employed

Form CPT1 asks CRA to rule on whether the engagement is pensionable or insurable employment when the parties cannot settle status from the working facts. Either the payer or the worker may request the ruling. Submit a complete operating picture, including the agreement, instructions, schedules, tools, delegation rights, expenses, financial risk, investment, and profit opportunity. A result on Canada Pension Plan or employment insurance status does not resolve provincial employment standards, and an Ontario employment-standards decision does not substitute for CRA's ruling. Keep each conclusion labelled with the statute and period it covers.

Issued by: Requested by either the foreign payer or the Canadian worker; the Canada Revenue Agency issues the ruling.

Timing: Request it when status is uncertain and before unresolved operating facts become an extended payment history. CRA appeal rights generally run for 90 days after the decision is communicated.

Sources: Canada Revenue Agency, Employee or Self-employed?

Classify the Canadian service under the correct exported-service provision before accepting a 0% GST/HST invoice. Section 7 is the general rule for services supplied to a non-resident, yet it excludes advisory, consulting, and professional services. Those services can qualify separately under section 23. Section 23 excludes work connected with commenced Canadian litigation for an individual, Canadian real property, tangible personal property located in Canada during performance, and specified agency or order-solicitation activity. The property exclusion requires a sufficiently direct connection, which makes the contract's objective and deliverables important. Confirm the contracting recipient, the service category, relevant Canadian property, and any agency role before recording the invoice as zero-rated.

Sources: Canada Revenue Agency, Exports of services and intellectual property

What an invoice has to show

• GST/HST account number for a registered supplier's taxable supply of C$100 or more

  Canada requires a registered supplier to put its GST/HST account number on an invoice, receipt, contract, or other business paper when the taxable goods or services total C$100 or more. A zero-rated exported service remains a taxable supply at 0%, so registration and the invoice amount can activate this field even when no tax is collected. Match the number with the supplier's legal or trading name and the document's transaction date through CRA's registry. A valid account confirms registration on that date. It does not confirm that section 23 applies to the service described on the invoice.

  Sources: Canada Revenue Agency, GST/HST account confirmation, Canada Revenue Agency, When to register for GST/HST

• A service description that can be matched to the exported-service evidence

  Canada's section 23 decision requires enough detail to identify the service objective and test the Canadian-property, litigation, and agency exclusions. Accept a zero-rated professional-services invoice only when its description can be reconciled with the agreement, deliverables, contractual recipient, and the customer's non-residence certification. A vague label such as consulting does not show whether the contractor advised on Canadian real property, worked on tangible property located in Canada, or acted as the customer's agent. CRA places the zero-rate determination and supporting-record duty on the supplier, while the payer controls several facts in that record and should correct inaccurate scope descriptions before approval.

  Sources: Canada Revenue Agency, Exports of services and intellectual property, Canada Revenue Agency, Exports and residence status

• Foreign-currency amount linked to a documented GST/HST conversion method

  Canada permits the contractor to invoice and receive payment in a foreign currency. The contractor must still convert the consideration into Canadian currency for GST/HST reporting through an approved date and exchange-rate source. The invoice and payment record should let the contractor identify the chosen conversion date, source, and Canadian-dollar tax result. CRA allows specified alternatives, including the payment date or an eligible monthly average, when the method is used consistently for a reasonable period and supported by records. The parties may use different tax-conversion methods, so the payer should preserve the agreed currency and amount without imposing its own accounting rate on the contractor's return.

  Sources: Canada Revenue Agency, Conversion of Foreign Currency

Write the due date, completion or acceptance trigger, invoice currency, and any late-interest formula directly into the services agreement. A Canadian late-interest clause needs special care when it states a daily, weekly, monthly, or other rate for a period shorter than a year. Under the federal Interest Act, interest above 5% per year is not recoverable on that wording unless the written contract expressly states the equivalent yearly rate. Use the yearly equivalent beside the shorter-period rate and make the event that starts interest objectively verifiable. This rule controls recoverability of the interest term under Canadian law; it does not create a standard invoice deadline for this cross-border engagement.

Sources: Justice Canada, Interest Act

The currency on the invoice

The contractor may invoice and receive payment in Canadian dollars or an agreed foreign currency. GST/HST reporting remains a Canadian-dollar calculation when the invoice uses another currency. CRA generally looks to the value on the day tax becomes payable and also permits specified alternatives, such as the payment date, the day the foreign currency is acquired, or an eligible monthly average. The contractor must choose an acceptable exchange-rate source, document it, and apply the chosen method consistently for a reasonable period. State the commercial currency and responsibility for conversion costs in the agreement, then preserve the invoice amount and payment date. The payer's internal reporting conversion does not replace the contractor's GST/HST record.

Sources: Canada Revenue Agency, Conversion of Foreign Currency

Sending every foreign-customer service through the general zero-rate rule

A non-resident customer does not place every Canadian service inside section 7. Advisory, consulting, and professional services are excluded from that general route and need their own section 23 analysis. The work can fall outside section 23 when it concerns commenced Canadian litigation for an individual, Canadian real property, tangible property in Canada during performance, or specified agency activity. Capture the true service objective in the agreement and invoice, identify the contractual recipient, and obtain the signed non-residence certification. If the scope changes toward Canadian property or an agency role, revisit the tax treatment before approving the next 0% invoice.

Sources: Canada Revenue Agency, Exports of services and intellectual property, Canada Revenue Agency, Exports and residence status

Leaving zero-rated exports out of the C$30,000 registration calculation

A 0% GST/HST rate does not remove exported-service revenue from the small-supplier test. Zero-rated supplies remain taxable supplies, and the usual C$30,000 calculation includes worldwide taxable supplies of the contractor and associated persons. A one-quarter crossing starts registration and the correct tax treatment on the crossing supply. A crossing measured over four consecutive quarters follows the later end-of-small-supplier branch, with registration due within 29 days of the effective date. Ask the contractor to monitor the threshold across all customers and validate the GST/HST account when it appears. Customer location alone does not keep the contractor outside registration.

Sources: Canada Revenue Agency, When to register for GST/HST

Closing the payroll review because the payer has no Canadian presence

A foreign employer with no Canadian place of business still has Canadian employer responsibilities when the relationship is employment. After reclassification, address the payroll account, employee identity and tax-credit forms, income-tax deductions and remittances, and T4 reporting rather than continuing the contractor process. Determine the pension and insurance branches separately: CRA describes Canada Pension Plan coverage for this employer category as optional through Form CPT13, and Quebec has its own pension and provincial payroll rules. Then test the employment standards jurisdiction. Ontario's Act provides one province-specific example in which misclassification can produce employee entitlements, a notice of contravention, penalties, prosecution, or both.

Sources: Canada Revenue Agency, Employers' Guide for payroll deductions and remittances, Ontario Ministry of Labour, Employee status