Entrepreneurship & Small Business

Adding a consultant for US project - HST on Invoice?

  • Last Updated:
  • Oct 26th, 2020 6:27 pm
[OP]
Newbie
Jun 19, 2017
76 posts
41 upvotes

Adding a consultant for US project - HST on Invoice?

I've been working for a US client which is zero rated tax on invoice for a couple of years. I have now referred another IT Consultant and rather than going through the additional vendor onboarding they would like me to just take him under my contract. I cannot take him on as an employee as he is an independent contractor. My question is around HST.

Since he would bill me as Canadian corp to corp with a contract and statement of work, his invoice to me would contain HST. Since I can't pass this charge on as a taxable line to the US client, do i just add it to his hourly rate? I don't want to pay for the tax out of my own pocket. Or is there another way to do this?
Example: for an hour of work he bills me CAD 100 + CAD 13. So I bill the client CAD 113?

Any other advice you would give or things to be aware of?
1 reply
Deal Addict
Jan 21, 2018
4665 posts
4718 upvotes
Vancouver
His work is an input to your work, which in turn is billed to the U.S. company as zero rated. He charges you HST, and you pay it. You report it as HST you paid on your quarterly HST report, and you will get a refund if it exceeds the HST you collected. So you don't have to pay in the end, but it's a question of timing - you will have to fund the HST amount for a few months on average before you get paid back.

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