How Canadian Translation Agencies Handle GST/HST and PST

What to take away

Translation services are generally taxable for GST/HST when supplied in Canada, unless the agency is a small supplier.
Standalone provincial PST generally does not apply to translation services in BC, Saskatchewan, or Manitoba; Quebec QST does apply.
A translation agency must register for GST/HST once its taxable revenues exceed CAD 30,000 over four consecutive calendar quarters.
CRA can assess uncollected tax, interest, and penalties if an agency fails to register or charge GST/HST when required.

Federal GST/HST on translation services

Under the federal Excise Tax Act, translation and interpretation services are taxable supplies. The standard GST rate is 5%. Ontario charges 13% HST on the same base. Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island charge 15% HST.

Place of Supply Tax Rates

Ontario

Tax type: HST
Rate: 13%
Provincial part: 8%

Alberta

Tax type: GST
Rate: 5%
Provincial part: none

Atlantic

Tax type: HST
Rate: 15%
Provincial part: 10%

Place of supply rules decide which tax rate applies. CRA looks at where the service is performed and where the client is located. For a translation agency based in Toronto, work delivered to a client in Calgary is taxable at 5% GST because Alberta has no provincial component.

Work delivered to a client in Ottawa is taxable at 13% HST. Work for a client in Montreal is taxable at 5% GST plus 9.975% QST. Work for a client in Halifax is taxable at 15% HST.

The CRA page on place of supply rules explains how to determine this. When a Canadian agency invoices a US client, the GST/HST treatment may change. Supply to a non-resident is often zero-rated, so tax and contract points to check belong in the engagement letter before the first invoice.

Provincial PST and Quebec QST

Many provinces do not collect a separate provincial sales tax on translation services. British Columbia, Saskatchewan, and Manitoba generally exclude services like translation from their PST or RST. Alberta and the territories have no provincial sales tax at all.

Quebec is different. Revenu Québec applies QST at 9.975% to most services, including translation. Quebec agencies claim input tax credits on business purchases.

Provincial Tax Treatment

BC/SK/MB

PST/RST/QST: Exempt
Translation: Not taxable
Input credits: N/A

AB/Territories

PST/RST/QST: No tax
Translation: Not taxable
Input credits: N/A

Quebec

PST/RST/QST: 9.975% QST
Translation: Taxable
Input credits: Available

In Canadian tax terms, provincial rules stand where US state rules would, municipal rules cover local permits, and private rules are contract terms between the agency and client. Municipal business licences are local permits and do not alter sales tax. Private client contracts can allocate economic risk, but they do not override the Excise Tax Act.

Tax type	Administrator	Translation service treatment	Key note
GST/HST	CRA	Taxable at 5% or HST rate	Small supplier threshold CAD 30,000
British Columbia PST	BC Ministry of Finance	Exempt, not a taxable service	No PST charged on translation
Saskatchewan PST	Saskatchewan Ministry of Finance	Exempt, not a taxable service	No PST charged on translation
Manitoba RST	Manitoba Finance	Exempt, not a taxable service	No PST charged on translation
Quebec QST	Revenu Québec	Taxable at 9.975%	Input tax credits available

For local pricing, Pricing localization projects in Canadian dollars covers invoicing by province.

GST/HST registration triggers and small supplier rule

A translation agency must register for GST/HST when it stops being a small supplier. You are a small supplier if your worldwide taxable revenues, including those of associates, are CAD 30,000 or less over four consecutive calendar quarters. That window is the current quarter plus the three before it, so the test rolls forward each quarter.

The CRA page for GST/HST for businesses walks through the test. Voluntary registration is allowed even below the threshold.

To register:

GST/HST Registration Steps

Determine taxable revenue over four quarters
Create a CRA business number
Submit registration online or by phone
Start charging from effective date

Get a Business Number. Apply for a BN if the agency does not have one. The GST/HST account sits under it as the RT program account.
Open the GST/HST account. Use CRA My Business Account, call 1-800-959-5525, or mail Form RC1.
Set the effective date. It is the day the agency must start charging GST/HST, normally the day it stops being a small supplier.
Choose a filing frequency. CRA sets the default by revenue: annual filing at CAD 1.5 million or less in taxable revenue, quarterly up to CAD 6 million, monthly above that. Monthly filing can be elected at any level.

What documents CRA expects

A complete GST/HST application needs proof of identity and business details. Use this checklist:

CRA Application Checklist

Legal name and trade name
Business and mailing address
Owner, partner, or director names and SINs
Business number if one exists
Fiscal year-end date
Description of main activity
Estimated annual taxable revenues

Business Number, if the agency already has one, plus the RT program account number.
Proof of identity for the owner or directorsa driver's licence, a passport, or a provincial ID card.
Proof that the business existsarticles of incorporation or a partnership agreement.
Business detailslegal name, operating name, addresses, and the translation services sold.
Banking informationa void cheque or a direct deposit form.
Authorizationthe person who may act for the business, plus a signed consent form if an accountant files on the agency's behalf.

Keep copies with your tax records. A client contract can also clarify who bears the tax. Strong contract terms that prevent disputes name the tax, the payer, and the invoice date.

Non-compliance consequences

Failure to register on time has a concrete result. CRA can assess the GST/HST you should have collected, as if you had charged it. You cannot later add the tax to past invoices.

Interest accrues on the assessment, and penalties apply for late registration and late returns. In a worst case, CRA may hold directors jointly liable for unremitted amounts.

For federal contracts, agencies also face federal language rules Ottawa contractors should know.

Common questions

Do I have to charge HST to an Ontario client if my agency is in Alberta?

Yes. If your agency is registered for GST/HST, you charge the tax rate in the province where the client is located, based on place of supply rules.

Are translation services zero-rated when the client is outside Canada?

Many services supplied to non-residents are zero-rated, but you must confirm the specific conditions with CRA. A zero-rated supply still lets you claim input tax credits.

Do I need to collect PST in Manitoba?

No. Manitoba RST generally does not apply to translation services. Only federal GST/HST and Quebec QST apply.

What happens if I did not charge GST/HST for two years?

CRA can assess the tax, interest, and penalties from the date registration should have occurred. You usually cannot recover that tax from past clients.