GST is handled completely separately than income tax, despite the fact that you call the same number to ask questions. There are different rules regarding residency status for GST. Meaning you may be a non-resident for income tax purposes but a resident for GST purposes. And residents need to collect and remit GST.

The rules here are a little easier to follow. If you expect to make more than CDN$30,000 in a given year while in Canada, then you need to charge GST. For most consultants, that’s ‘twixt two and four months worth of work so chances are, you’ll need to file.

To collect GST, you need a Business Number which is easy enough to get. Call up CRA at 1.800.959.5525 and they should be able to give it to you over the phone. Here is the gist of what to tell them:

• I am not a Canadian resident but I *am* a Canadian citizen. I will be working in Canada for a period of X months and expect to make over $30,000 during that time. I’d like to apply for a Business Number for GST for the period that I am in Canada.
• I will file GST annually
• I do not need a payroll account
• I am a sole proprietor

They may try to tell you that you need to call the International Tax Office but that’s wrong. The International Tax Office doesn’t deal with GST at all.

Grey areas:

Should I keep my Business Number active after I leave the country?
Probably not. In my experience, it’s pretty easy to deactivate and reactivate it so it’s worth the phone call to deactivate it when you leave. And that’s all you need to do. There’s no paperwork involved. And you do *not* charge GST for any work you perform outside Canada.

Should I incorporate?
My opinion is no, you shouldn’t. The major advantage of incorporation is to lower your taxes which isn’t really an issue for non-residents. More importantly, with you as the major shareholder, it constitutes a major residential tie to Canada, something you should avoid.

** UPDATE ** Setting up a corporation in Canada means the corporation will pay tax in Canada. In my experience, *EVERY* contracting agency will try to pressure you to incorporate. Fair enough, they don’t want to rock the boat any more than you do and dealing with a foreign entity is a warning flag. But stick to your guns. I had to go through three agencies in my last contract before I found one that would accept me. And even then, I had to sub-subcontract.

http://codebetter.com/blogs/kyle.baley/archive/2008/06/17/rehash-canadian-taxes-for-non-residents.aspx

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