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Canada Tax – GST Collection to Start in November

kochubei_valeria
Community Manager

* Collection of Canada Taxes has begun today, November 15, 2021.

 

As of July 2021, we are required by Canadian law to collect Goods and Services Tax (GST) and provincial level taxes including Harmonized Sales Tax (HST), Quebec Sales Tax (QST), and Provincial Sales Tax (PST) (we’ll refer to all of these as Canadian Transaction Taxes) when freelancers, agencies, and clients in Canada purchase Upwork services. This applies to fees and subscriptions paid to Upwork and does not apply to services provided by freelancer to client. 

 

We will begin collecting GST/HST and QST numbers beginning September 15, 2021

 

Upwork is required to collect GST from those who are not registered under the normal GST/HST regime in Canada. As a result, we will begin collecting GST/HST and QST numbers from users who are registered for Canadian Transaction Tax purposes. If you have a valid GST/HST number and a QST Number (for those in Quebec) — and have it on file with us, we don’t have to charge and collect the tax from you. 

 

Please note, users in British Columbia (BC), Sasketchwan (SK), and Manitoba (MB - Dec 2021) will be subject to PST regardless of their GST registration status. 

 

What is GST/HST 

 

Canada’s GST/HST is a type of value-added tax. The Canadian government assesses 5% GST on digital services, including those provided by Upwork, while provincial rates like HST/PST and QST vary by province. A number of Canadian Provinces assess a similar tax in addition to GST/HST. 

 

  • Canadian tax law requires Upwork (and other foreign marketplace companies) to begin collecting some of these taxes on Upwork fees charged to Canadian freelancers, agencies, and clients who are considered “consumers” in Canada. 
  • You will be considered a consumer if you do NOT have a valid Canadian GST/HST and/or a QST Number (for customers in Quebec) on file with Upwork. 
  • PST may apply to all freelancers, agencies, and clients in BC, SK, and MB

 

The amount of the taxes will vary depending on which province you reside or do business in. You will be subject to National and Provincial taxes based on your tax address on file. For more information on provincial tax ranges, see our Help article.



Take Action Now - Update your information before tax collection begins in November*

 

Submit your GST/HST number and QST number and update the legal name of the Taxpayer (as registered for the GST) as soon as possible to avoid being charged tax on Upwork fees. 

 

1. Add your Tax ID 

To file your GST/HST andQST number with us, click here.


2. Update your Taxpayer Information

Update the legal name of Taxpayer (as registered for the GST) as soon as possible to avoid being charged tax on Upwork fees.


  • The legal name of Taxpayer provided must match the name filed for GST ID with Canada authorities or else the number cannot be validated. The validation process could take a couple of days depending on volume, so providing this as early as possible is important. 
  • For freelancers, ensure the name located in the W8-BEN section (found under Settings > Tax Information) matches the name attached to your GST/HST number.
  • For clients, ensure the Company Name in the Company Details section of your profile (found under the My Info tab) matches the name attached to your GST/HST or QST number.

3. Update your “Tax Residence” address 

In order to ensure the proper tax rate is applied, please make sure the address you provided as your tax residence is accurate. 


  • To verify which address(es) you have listed, go to your Profile Settings and ensure your address fields are accurate under both the (1) "Contact Info" and (2) "Tax information" tabs.
  • You are required to complete the tax residence on the tax information page as a necessary step in order to provide your Tax ID.
  • GST ID will appear on the Tax Information tab (QST ID will appear for those in Quebec). 

 

If you don’t have a GST/HST or QST number, we will be required to assess the tax on the following for freelancers, agencies, and clients:

 

  • Freelancer service fees (not your earnings)
  • Connects purchases
  • Membership fees, such as for our Freelancer Plus plan
  • The payment processing fees you pay for Direct Contracts

Note: Clients will not be charged these taxes on payments made to Freelancers, and Freelancers will not be charged these taxes on earnings, just on payments made to Upwork.

 

Additionally, for clients - if you don’t have a GST/HST number, we will assess the tax on the following:

  • Enterprise fees
  • The cost of a Feature Job (tax will be applied to the cost of post, which is currently $29.99)
  • The Upwork Conversion fee (this is the fee clients pay to move a relationship off of Upwork).

 

Upwork will not be collecting or remitting sales tax on the rates freelancers charge to clients. For example, if a client pays a freelancer $200 for a fixed-price contract, the client will not be assessed any GST on the $200.

 

Collection of Canada taxes will begin in November* 2021

 

We will provide you with an update here and via email again when the collection of Canada taxes begin. You can add your GST/HST and QST Number at any time beginning September 15, 2021. Your tax ID will need to be validated. Validation can take several days — if entering your number after collection has already begun, we cannot stop collecting until verification is confirmed. 

 

  • If you add your valid GST/HST Number at a later date, we will stop collecting these taxes at that time. We will submit the taxes collected to the Canadian government and cannot refund taxes that we collected from you unless we can validate that your GST number was valid at the time of transaction. For our users in BC, MB (Dec. 2021), and SK, PST may apply regardless of your GST registration. If you are in BC and provide GST ID, we will not charge GST, however PST may still apply.

 

All taxes collected by Upwork will be passed on to the Canadian and Provincial governments, as required by Canadian law. You may also want to consult a tax professional for more information on how this new law and its exceptions may affect you and your business.

 

We’ll also send you an email about this and you can view more information about national and provincial taxes and how GST/HST will be calculated when collections start in this Help article

 

To add your Tax ID, click here

 

If you have any questions, please reach out to us.

*Updated on 11/15/21

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