GST/HST Registration After Moving to the US: Cancel, Keep, or Zero-Rate?

Moving to the US does not automatically cancel your GST/HST registration. The Excise Tax Act operates independently from the Income Tax Act, so your GST/HST status does not follow your income tax residency. If you were registered before you left and you continue to make taxable supplies in Canada (or supplies connected to Canada), the registration may need to stay open, and if those supplies are services consumed outside Canada, they may be zero-rated. Getting this wrong in either direction costs money: keeping a registration you do not need means filing returns and potentially charging tax you should not be collecting, while cancelling a registration you still need means failing to collect and remit tax you owe.

Does leaving Canada cancel my registration?

No. Cancellation requires either a request from you or a determination by the CRA. Under ETA 242(1), a registered person may request cancellation, and under ETA 242(2), the Minister may cancel a registration where the person is no longer engaged in a commercial activity. But neither happens automatically when you change your address.

If you were a small supplier (under $30,000 in worldwide taxable supplies over the last four consecutive calendar quarters and in any single quarter) and you registered voluntarily, you can request cancellation at any time. If you were above the $30,000 threshold, cancellation is available when you are no longer making taxable supplies in Canada or when you fall below the threshold and have been registered for at least a year.

The practical risk of not cancelling: you remain obligated to file GST/HST returns (annually, quarterly, or monthly depending on your reporting period), and the CRA expects returns even if they are all zeros. Filing late or not at all generates penalties and interest, even on nil returns.

When are my services zero-rated?

This is the question that matters for someone who moves to the US but keeps Canadian clients. Under ETA Schedule VI, Part V, certain exports of services are zero-rated (taxable at 0%), which means you charge no GST/HST but you can still claim input tax credits on Canadian expenses related to those services.

The general rule for services (section 7 of Part V, Schedule VI) zero-rates a supply of a service made to a non-resident person, except where:

• The service relates to real property situated in Canada
• The service relates to tangible personal property that is situated in Canada at the time the service is performed
• The service is rendered to an individual who is in Canada when the service is performed
• The service is a transportation service
• The service is a telecommunication service

For a consultant, software developer, accountant, or other service provider who moves to the US and continues serving Canadian clients remotely, the key question is whether the service is rendered to an individual who is in Canada when the service is performed. If the client is a corporation (not an individual), this exception does not apply. If the client is an individual physically in Canada, the service is not zero-rated under section 7.

There is also a separate test under section 5 of Part V for advisory, professional, or consulting services, which zero-rates the supply when the service is made to a non-resident who is not a consumer of the service (meaning the non-resident is purchasing the service for business purposes, not personal consumption). This provision often applies when a non-resident corporation hires a Canadian-registered consultant.

The rules are fact-specific. Whether a particular supply is zero-rated depends on the nature of the service, who the client is (individual vs entity), where the client is, and what the service relates to. Getting this analysis wrong means either charging tax you should not (and the client may not be able to recover it as an ITC if they are not registered) or not charging tax you should (and owing it out of pocket plus penalties).

What if I am providing services to US clients only?

If all your clients are US-based (non-resident persons) and the services are not related to Canadian real property, Canadian tangible property, or individuals in Canada, the supplies are zero-rated. You keep the registration, file nil-tax returns (supplies are at 0%), and claim ITCs on any Canadian expenses you still incur (a Canadian phone plan, a Canadian professional membership, software subscriptions paid through a Canadian credit card).

If you have no Canadian expenses left, the ITCs are zero too, and the returns are pure zeros. At that point, cancelling the registration simplifies your life. There is no benefit to keeping a registration that generates zero ITCs and zero tax.

What if I keep some Canadian clients?

This is where most people land: a mix of Canadian and US clients. The US clients’ supplies may be zero-rated (depending on the tests above). The Canadian clients’ supplies may or may not be taxable, depending on the place-of-supply rules.

For services, the place of supply is generally determined by where the recipient is located (for B2B services) or where the service is performed (for B2C services). If you are providing accounting services from the US to a Canadian corporation, and the service is advisory/professional in nature, the zero-rating under section 5 may apply because the recipient is a non-resident of Canada (the Canadian corporation is a resident, but you, the supplier, are the non-resident, and the test in section 5 runs on the recipient’s status, not the supplier’s).

Wait. This gets confusing. Let me be precise about the direction:

If you move to the US and provide services back to Canadian clients:

• You are the supplier (now a non-resident)
• The Canadian client is the recipient (a resident)
• The supply is made in Canada if the Canadian address of the recipient determines the place of supply under the general rules

In most B2B service situations, the supply is deemed to be made in Canada when the Canadian business address of the recipient is in Canada. That means GST/HST applies. The zero-rating provisions in Schedule VI, Part V, section 5 zero-rate supplies made to a non-resident, but the Canadian client is not a non-resident. So you charge and remit.

The zero-rating helps in the other direction: when your client is a non-resident (a US company hiring you). Then section 5 or section 7 may zero-rate the supply.

What about the non-resident override?

Under ETA 240(1), a non-resident person who does not carry on business in Canada is not required to register. If after moving to the US you are no longer carrying on business in Canada (you do not have a permanent establishment, employees, or a place of business in Canada), you may not be required to be registered even if you make some taxable supplies in Canada.

But “carrying on business in Canada” under the ETA is a question of fact that depends on the same kinds of ties that the income tax uses: do you have a fixed place of business, employees, a bank account used for business, an agent in Canada who solicits orders? A non-resident with no Canadian presence who makes occasional supplies to Canadian clients may fall outside the registration requirement. A non-resident who maintains a Canadian business bank account, a Canadian virtual office, and ongoing Canadian client relationships is more likely carrying on business in Canada.

If you are not required to register and you cancel, you are off the hook for filing returns, but you also lose the ability to claim ITCs on Canadian expenses. And your Canadian clients cannot claim an ITC on payments to an unregistered supplier (because no GST/HST was charged), which for B2B clients is a cost they absorb. Some suppliers keep the registration specifically so their Canadian clients can recover the tax.

What should I do next?

List your clients by country. For each Canadian client, determine whether the supply is zero-rated or taxable under the place-of-supply rules. If all supplies are zero-rated or you have no Canadian clients, decide whether keeping the registration for ITCs is worth the filing obligation. If you have taxable supplies, keep the registration and file. If you cancel, send the request to the CRA before your next filing period closes, so you are not penalized for a late nil return.

• Keeping Canadian clients after moving to the US, the income tax side of the same scenario
• Leaving Canada permanently: a tax checklist, where GST/HST cancellation is one item on a longer list
• Am I still a Canadian tax resident?, because GST/HST registration and income tax residency are separate questions

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.