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Canada Tax – GST Collection to Start in November

kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
1 of 17

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 10/1/21

~ Valeria
Upwork
santhib
Active Member
Sandra T Member Since: Mar 20, 2017
2 of 17

Valeria, what is the reason why we Canadian freelancers still can't collect sales taxes from our Canadian clients, while freelancers from all over the world can collect sales taxes for clients in their own countries (and have been doing so for years?).

kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
3 of 17

Hi Sandra,

 

Thanks for sharing your concern with us, I'll forward it to the team. At this moment, Upwork collects these taxes on the services we provide to freelancers, agencies, and clients in Canada and forward them to the Canadian tax authorities. We do not collect the tax on the payments clients make to their freelancers on Upwork. If there are any changes in the future, we will certainly inform Upwork users about them.
I'd also like to note that collecting sales taxes on services freelancers and agencies provide their clients isn't available on Upwork for talent located in other countries either. For more information, please see this section of Upwork Help.

~ Valeria
Upwork
ruth_artola
Active Member
Ruth A Member Since: Apr 10, 2021
4 of 17

I'm exempt from taxes under Canadian law as I do not reside there. I'm currently living in the US but when I try to change my address it asks me for a tax form. I never stay in one country for more than 3 months. I only put the Canadian address which is affiliated with my bank as a formality. I suspect the only fix for this would be to get hired directly from whichever company I want to work for. I just want to confirm. Thank you!

tinker_bell3
Moderator
Joanne Marie P Moderator Member Since: Nov 26, 2017
5 of 17

Hi Ruth,

 

Thanks for asking. We are required to assess GST on services provided by our company to anyone receiving such services in Canada. This applies even if you are a digital nomad and only temporarily residing in Canada. 

 

Any time you move to a different country, even if temporarily, you should update your tax residency information on Upwork. For example, if you move to and work from South Africa, you may be subject to South African laws. If you then move to Canada, Canadian GST will be assessed accordingly once you update your address. Please consult a tax professional if you have questions as to whether and how the GST applies to you and your business.

 

Also, if you're staying in the US for long periods of time, you may want to consult with a local advisor if you need to obtain the proper work visas as a freelancer working in the US.

~ Joanne
Upwork
a5a14c23
Active Member
Cole B Member Since: Sep 17, 2021
6 of 17

Getting the message "In compliance with Tax Law, we must add Canadian taxes (GST / HST) on UpWork fees unless you have provided a GST/HST number {...}." 

 

However, our Tax Residence is in Vermont, and there are no fields in which to enter GST / HST numbers uder Tax Information.

 

**Edited for Community Guidelines**

wescowley
Community Guru
Wes C Member Since: May 3, 2019
7 of 17

Valeria K wrote:

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. 

 

Valeria...

 

I'm wondering why I just got a mail saying Upwork is going to start collecting Canadian GST from me since I'm not in Canada. I'm in Florida, so we probably have a bunch of Canadians around in the winter, but I don't think that counts?

 

Thanks!

 

 

kochubei_valeria
Community Manager
Valeria K Community Manager Member Since: Mar 6, 2014
8 of 17

Hi Wes,


I've checked with the team and got a confirmation that this email was incorrectly sent to you if you're not located in Canada. You can just ignore it. Apologies for any confusion this has caused.

~ Valeria
Upwork
hkmuk
Active Member
Yuko H Member Since: Apr 5, 2021
9 of 17

Hi, 

Currently, I am not registered, and I do not have an HST number in Canada (Ontario).  Since I do not make more than $30,000CAD, I know that I don't have to register. 

I read the email from Upwork and understood that Upwork would start collecting HST on behave of Canadian freelancers from Oct 1. 2021.  What I don't understand is that small businesses/ self-employed as myself don't need to charge HST on my service and why Upwork is collecting from my earning?  Do I pay HST on Upwork fees on non-Canadian clients, too?

Could you please explain so I can understand properly?  

Thank you in advance.  

 

Best regards,

Yuko

andregutierrez22
Moderator
Andrea G Moderator Member Since: Jul 7, 2020
10 of 17

Hi Yuko,

 

Please know that Upwork is required to collect GST from Canadian consumers and Canadian businesses who are not registered under the normal GST/HST regime. Those who have a GST/HST and/or QST Number are not considered a consumer by the Canadian government.


We cannot provide specific tax advice, so we recommend that you consult your local tax advisor with specific questions or for more details on how this may affect your business.

I've also merged your post to our Announcement so you can check the latest information regarding Canada Tax.

 

~Andrea
Upwork