When does a business have to self assess GST/HST on services it buys from outside Canada, and who files Form GST59?
For 2026, a Canadian resident buying a service or intangible from an unregistered non resident self assesses 5% GST unless it uses the purchase 90% or more in commercial activities. Non registrants file GST59 by the last day of the following month; registrants use line 405. HST province residents using it there 10% or more add the provincial part.
Who self assesses, and where does the tax go?
The tax is due on a service or intangible personal property bought from an unregistered non resident outside Canada when your client uses it less than 90% in its commercial activities, or less than 100% for a financial institution canada.ca. Registration decides the form, not whether tax is owed.
| Your client | Federal 5% | Provincial part of the HST | Where it is reported | Due |
|---|---|---|---|---|
| Registrant, 90% or more commercial use | None | None | Nothing to report | n/a |
| Registrant, under 90% commercial use | 5% of the price | Provincial rate times use in the province, if 10% or more is used in HST provinces | Line 405 of the GST/HST return | Return due date for the period the tax became payable |
| Non registrant, under 90% commercial use | 5% of the price | Same test, on GST59 line 403 | Form GST59, lines 401 to 405 | Last day of the month after the tax became payable |
| Non registrant, 90% or more commercial use | None | None | Nothing to report | n/a |
| Financial institution | Owed unless use is 100% commercial | Same test; a selected listed financial institution generally uses the special attribution method instead | Line 405 or GST59 | As above |
The rate comes from section 218 of the Excise Tax Act: the recipient pays 5% on the value of the consideration laws-lois.justice.gc.ca. The CRA's GST59 page is explicit that the form is for non registrants resident in Canada
canada.ca, and the form itself sends registrants to their regular return
canada.ca.
The provincial part applies only to residents of New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island. It is 8% for Ontario, 9% for Nova Scotia since April 1, 2025, and 10% for the other three, multiplied by the share of use in that province canada.ca. The full HST rates are on HST rates by province for 2026.
What counts as an imported taxable supply?
Section 217 defines it. For services, it's a taxable supply, other than a zero rated supply, made outside Canada to a person resident in Canada. For intangible personal property (licences, patents, software rights), it's the same test applied to the property laws-lois.justice.gc.ca.
The definition leaves out a supply acquired for use exclusively in your client's commercial activities. It also leaves out a service consumed by an individual exclusively outside Canada, a service on tangible property situated outside Canada, and intangible property that may not be used in Canada or that relates to real property outside Canada laws-lois.justice.gc.ca. The GST59 instructions add that transportation services are out, and so is a service for litigation outside Canada once it has started
canada.ca.
"Exclusively" generally means 90% or more, or 100% for a financial institution canada.ca. Commercial activity is any business carried on, except the making of exempt supplies, and the definition doesn't depend on registration
canada.ca. So the clients who actually owe this tax are mostly businesses with exempt sales, charities and other organizations with exempt or non business activity, and financial institutions.
Check the supplier first. A supply by a non resident is deemed made outside Canada unless it's made in the course of a business carried on in Canada, or the non resident is registered under Subdivision D of Division V, the normal GST/HST registration laws-lois.justice.gc.ca. A non resident with a normal GST/HST number charges the tax on its invoice, and there's nothing to self assess. Which rate it charges follows the place of supply rules, and the supplier side is on GST/HST registration for non residents.
What does a GST59 look like for an Ontario non registrant?
Your client is an Ontario organization that makes only exempt supplies, so it isn't registered. It pays a US consulting firm with no business or registration in Canada an invoice worth $12,000 in Canadian dollars. The invoice is due March 20, 2026 and your client pays it on March 18, 2026.
| GST59 line | Used 100% in Ontario | Used 70% in Ontario, 30% in Alberta |
|---|---|---|
| 401 Value of the imported taxable supply | $12,000 | $12,000 |
| 402 GST at 5% | $600 | $600 |
| i Provincial part at 8% times Ontario use | $960 | $672 |
| 403 Total provincial part | $960 | $672 |
| 405 Tax due (402 plus 403) | $1,560 | $1,272 |
| Calendar month on the form | March 1 to 31, 2026 | March 1 to 31, 2026 |
| Return and payment due | April 30, 2026 | April 30, 2026 |
Tax becomes payable at the earlier of the day the consideration is due and the day it's paid, so March 18 sets the month. The return and payment are due by the last day of the following month, and penalty and interest apply if the CRA doesn't receive both by then canada.ca. Line 403 is the provincial rate times the share of use in the province, which is why the 70% case drops to $672
canada.ca. The CRA wants the tax worked out on the amount charged in Canadian dollars
canada.ca.
Mail Part 2 with the payment to your client's tax centre; it can't be filed at a bank. Pay in Canadian funds to the Receiver General. No payment is needed if the tax is $2 or less, and a payment of $10,000 or more goes through a Canadian financial institution with Form RC158 while the return is still mailed canada.ca. The legal deadline is paragraph 219(b) of the Act
laws-lois.justice.gc.ca.
How does a registrant with partly exempt sales handle it?
A registrant reports the tax on line 405 in the reporting period in which the service or intangible was paid for or became payable canada.ca. Paragraph 219(a) makes it due with the return for that period
laws-lois.justice.gc.ca. The provincial part also goes on line 405
canada.ca.
Say your client is an Ontario registrant that uses a $50,000 software licence from an unregistered US developer 60% in commercial activities and 40% in exempt activities, all of it in Ontario.
| Step | Amount |
|---|---|
| Federal part: $50,000 × 5% | $2,500 |
| Provincial part: $50,000 × 8% × 100% Ontario use | $4,000 |
| Line 405 for the period | $6,500 |
| ITC on line 106: $6,500 × 60% commercial use | $3,900 |
| Net tax cost to your client | $2,600 |
The ITC comes from the general formula in subsection 169(1): tax in respect of a supply that becomes payable by a registrant, times the extent of commercial use laws-lois.justice.gc.ca. The tax still has to be reported in full on line 405, and the ITC is claimed separately; the lines are covered in GST/HST return lines. Had the use been 90% commercial, the licence would fall outside the definition and neither part would be owed.
When is the provincial part owed on an imported service?
Section 218.1 charges the provincial part, in addition to the 5% federal tax, on a resident of a participating province who receives an imported taxable supply of a service or intangible property for use in participating provinces laws-lois.justice.gc.ca. The GST59 instructions set the threshold: generally when the service or property is acquired for use at least 10% in participating provinces
canada.ca.
Because section 218.1 only applies to an imported taxable supply, a purchase used 90% or more in commercial activities carries neither the federal nor the provincial part. A selected listed financial institution generally doesn't self assess the provincial part at all and uses the special attribution method in subsection 225.2(2), with listed exceptions canada.ca.
This is separate from the provincial part on services and goods bought from another province, which non registrants report on Form GST489 canada.ca. That domestic rule is on GST/HST place of supply.
Sources
Does a small supplier that is not registered have to file GST59?
Only if it uses the service less than 90% in commercial activities. Commercial activity doesn't depend on registration canada.ca, so a small supplier using a foreign service entirely for its taxable business owes nothing. The $30,000 test is on the registration threshold page.
What if the foreign vendor charged GST/HST on its invoice?
If the vendor is registered under the normal rules, the supply is made in Canada and there's nothing to self assess laws-lois.justice.gc.ca. If it's a digital vendor under the simplified regime, your registered client should give its GST/HST number at the time of the supply. Tax that vendor collects can't be claimed as an ITC; the client asks the vendor for a refund instead
canada.ca.
Is GST59 used for imported goods?
What are qualifying consideration and internal and external charges on the form?
They're financial institution rules. A qualifying taxpayer self assesses on qualifying consideration for outlays made outside Canada (Situation E) or, if it has elected under subsection 217.2(1), on internal and external charges (Situation F). Tax for those becomes payable on the due date of the income tax return for the year, or six months after the year end if no return is required canada.ca.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.