A non-resident who sells software into Canada may be required to
levy Canada's Goods and Services Tax
("GST"—Canada's VAT) even though the
non-resident does not carry on business in Canada. This depends on
whether the software is "off the shelf" or custom,
whether it is licensed or sold and whether the non-resident is
already a GST registrant. To skip this analysis and register for
GST out of an abundance of caution can therefore subject a sale to
GST when GST would not otherwise apply.
Off-the-Shelf Software
Off-the-shelf software is pre-packaged, commercially available
software that one may pull "off the shelf" in a shop.
Such software typically comes with a standardized ("shrink
wrap") licence agreement which binds the customer by reason of
the customer having opened the box or loaded the software. This
kind of software is considered to be tangible personal property
and, as such, is always subject to GST on importation. The key,
then, for the supplier is to
