Canadian businesses that buy services or intangible property from suppliers outside Canada often assume that if the foreign supplier does not charge GST/HST, none is owed.
Section 218 of the Excise Tax Act says otherwise. It requires the Canadian recipient, not the foreign supplier, to calculate and remit the GST directly to the CRA.
Businesses that overlook this obligation, most commonly those with exempt or non-commercial activities such as financial services, holding companies, and non-profits, can face years of accumulated unremitted tax, penalties, and interest once the CRA identifies the gap on a CRA tax audit.
Any Canadian business that pays for consulting, licensing, software, marketing, or professional services from a non-resident supplier should understand when section 218 applies and how to comply with it.
