How does HST apply to digital subscriptions and software I buy from foreign companies?
When you buy digital services — software-as-a-service (SaaS), streaming subscriptions, cloud storage, online courses — from foreign (non-Canadian) companies, the HST rules depend on your status. If the foreign supplier is registered for Canadian GST/HST (either under the standard or the simplified regime), they should be charging you HST on the transaction.
If the foreign supplier is not registered or does not charge HST, and you are a Canadian business that is registered for HST, you are required to self-assess HST on the value of the imported service. Self-assessment means you calculate the HST that should have applied, report it on your HST return as tax collected (output tax), and simultaneously claim an ITC for the same amount if the service is used in commercial activities — resulting in a wash.
If the foreign supplier charges you HST (with a Canadian registration number on the invoice), you simply treat that as any other ITC-eligible expense if you are registered. If you are an individual consumer (not a registered business), you generally owe the tax but have no mechanism to pay it directly, and the CRA relies primarily on foreign suppliers being registered.
Key takeaways
- Foreign digital service providers should charge HST if they are registered in Canada.
- Registered Canadian businesses must self-assess HST on imported services where the supplier does not charge it.
- Self-assessed HST and an offsetting ITC typically net to zero for registered businesses.
- Individual consumers depend on foreign suppliers being registered and charging correctly.