Zero-rated is not the same as exempt
This distinction is the whole game. A zero-rated supply is taxable at 0%: you charge no tax to the customer, but you keep the right to claim input tax credits on the GST/HST you paid to produce it. An exempt supply has no tax either, but you cannot claim ITCs on related costs.
Exports and most sales to non-residents are zero-rated, not exempt, which is the favourable outcome. You get to recover tax on your inputs while charging your foreign customer nothing. Getting this classification right is what lets an export-focused business sit in a persistent refund position.
Exporting goods
Goods you sell and ship to a customer outside Canada are generally zero-rated, provided you have evidence the goods actually left the country. That evidence, shipping and customs documentation, is what the CRA looks for on review, so keep it with the invoice.
If the customer takes possession of the goods in Canada and exports them later themselves, the rules are different and the sale may be taxable, so who exports and when matters.
Providing services to non-residents
Services to a non-resident are commonly zero-rated, but there are important exceptions. The general rule zero-rates a service supplied to a non-resident, but the service is not zero-rated if it relates to real property in Canada, to goods situated in Canada at the time, or is a service rendered to an individual physically in Canada when it is performed.
So consulting delivered remotely to a US company is generally zero-rated; a service tied to Canadian real estate or performed for someone visiting Canada may not be. The nature and location of the service, not just the customer's address, decides it.
Digital and remote services
For a Canadian business selling digital services, software or remote consulting to genuine non-resident customers, the supply is usually zero-rated under the general rule. The key evidence is that the customer is truly non-resident and not in Canada when the service is performed.
Note the separate regime for non-resident vendors selling into Canada, who now often must register and charge tax to Canadian consumers. That is the mirror image and does not change your treatment when you are the Canadian exporter.
Why you still want to be registered
Because exports are zero-rated rather than exempt, an exporter benefits from being registered even below the $30,000 threshold. Registration lets you recover the GST/HST on all your Canadian costs, from rent to software to professional fees, while charging your foreign customers nothing.
An unregistered exporter simply eats that input tax as a cost. For a business whose customers are mostly abroad, voluntary registration and regular refund filings turn a cost into recovered cash.
Reviewed for the 2025 tax year by Udit Gupta, CPA, CA.
General information, not advice for your specific situation —
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