Brokentoy

I was recently asked how I handle charging clients GST/ RST (Goods and Services Tax and Retail Sales Tax for non-Canadians) for my design and code. My quick answer to them is that I don’t. And if you follow this key rule then you can avoid some accounting hassles by avoiding both charging and reporting GST on your invoices and tax returns. It comes down to this:

• If you deliver or publish your work electronically (upload to web, email as attachment) then you are providing a non-taxable service, and do not have to charge tax.
• If you deliver or publish your work as a physical object (CD, print ad, flyer) then you are obligated to charge and remit tax.

If you want the official interpretation then Ontario has provided some example situations to put your mind at ease. From one of their interpretations:

“Where artwork or graphic designs are sold to clients and transferred via the Internet or electronically via a modem to the client or to the client’s printer, on behalf of the client, no RST should be charged to the customer. This is the provisions of a non-taxable service. The provider of the non-taxable service must pay RST on any materials, equipment or taxable services purchased in order to provide the non-taxable service. Where a proof or approval sheet is faxed, mailed or given to clients to show them what was sent to the printer, RST does not apply to the charge for these sheets.”

If you’re outside Ontario your state or province may have a different interpretation of your situation so it’s important to make sure you aren’t setting yourself up for an uncomfortable situation with your friendly neighbourhood auditor. But for any designers or developers in my neck of the woods it looks like if we can avoid getting physical we’ll do just fine.

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