International tax experts at Ernst & Young have analyzed the local tax code and international tax treaties with Canada to establish the following tax guidelines for RecruitiFi hires within Canada.
CANADA GENERAL CONSIDERATIONS
How does RecruitiFi supply its services to Employers in Canada?
Before diving into the FAQs, let’s clarify the legal tenets underpinning RecruitiFi’s business model:
RecruitiFi’s base of operations: RecruitiFi is a US-based entity with no physical presence beyond American borders.
Distinct legal relationships: In line with the terms and conditions outlined for our business operations in Canada, we establish two separate and exclusive agreements:
A service agreement between RecruitiFi and the Employer, for the supply of services by RecruitiFi to the Employer
A service agreement between RecruitiFi and the Recruiter, for the supply of services by the Recruiter to RecruitiFi
Payment process: The transaction process entails Employers paying RecruitiFi for the services rendered, and subsequently, RecruitiFi paying the Recruiter for its services.
Absence of direct interactions: There are no direct contractual or monetary exchanges between the Employers and Recruiters.
Recruitment procedure: Should an Employer decide to recruit a Candidate via the RecruitiFi platform, the employment process ensues without involvement from RecruitiFi.
Precedence of terms: In cases where an Employer and an Agency have had prior contracts, the terms stipulated by RecruitiFi will supersede these existing contracts for the period of engagement through RecruitiFi.
For more information, see Terms | RecruitiFi.
CANADA CONSIDERATIONS FOR EMPLOYERS
This section of the FAQ applies to Employers in Canada that acquire services from RecruitiFi. Employers in Saskatchewan: There may be special tax considerations at a provincial level if you are based in Saskatchewan. If this is the case, please contact RecruitiFi at support@recruitifi.com.
Will RecruitiFi charge GST/HST to Employers?
No, RecruitiFi will not charge GST/HST on its Fees for the services supplied to Canadian Employers that provided RecruitiFi with their GST/HST registration number.
How can an Employer communicate an GST/HST registration number?
To communicate your GST/HST registration number to RecruitiFi, please email finance@recruitifi.com.
Why does RecruitiFi charge no GST/HST on its services if an Employer provided its GST/HST registration number?
The supply of services by a non-resident business in Canada such as RecruitiFi will only be subject to GST/HST where the Employer is a “specified Canadian recipient."
A “specified Canadian recipient” is defined as the service recipient whose usual place of residence is in Canada and who does not provide satisfactory evidence that they are registered under the general GST/HST regime i.e., that do not provide their GST/HST registration number to RecruitiFi.
Therefore, if a Recruiter provided RecruitiFi with its GST/HST number, no GST/HST will be charged.
Does it matter where the Recruiter, Candidate, or JobCast is located?
No, this does not matter. Other factors, such as the location of the Recruiter, Candidate and/or JobCast do not change the GST/HST treatment that is explained above.
The GST/HST treatment is determined by the nature of RecruitiFi’s services and location of RecruitiFi as service provider and the Employer as service recipient; the location of Recruiter, Candidate, and/or JobCast are not relevant to determine the GST treatment.
Is the service subject to any other taxes in Canada?
RecruitiFi encourages Employers to consult their (indirect) tax advisor regarding whether they are required to withhold any tax.
In this regard, RecruitiFi’s Terms stipulate that all Fees that are agreed between RecruitiFi and Employers are exclusive of GST/HST, and other taxes and that the Fees agreed are net of any taxes to be withheld by the Employer i.e., if any tax will be withheld by Employer, RecruitiFi expects you to gross up the payable amount as such RecruitiFi receives the Fee agreed.
Does an Employer have to share some sort of tax documentation?
For RecruitiFi not to charge GST/HST, RecruitiFi must collect the GST/HST registration numbers of Canadian Employers to prove they are not “specified Canadian recipients.”
Under the Canadian rules, Employers are liable to provide valid and true information regarding their GST/HST registration number.
The GST/HST number is structured as a 9-digit business number, followed by an “RT” suffix and a 4-digit account number (XXXXXXXXX RT XXXX).
What if an Employer does not provide the proper tax documentation?
For Canadian Employers that do not provide their GST/HST registration number, RecruitiFi will charge GST/HST.
As included in our Terms, all Fees that are agreed between RecruitiFi and Employers are exclusive of GST/HST and other taxes, if any. If applicable, RecruitiFi will charge GST/HST in addition to Employer Placement Fee and other fees.
Is RecruitiFi required to issue invoices to Employers in Canada?
There is no requirement for RecruitiFi to issue a GST/HST invoice to Employers in Canada that provided a valid GST/HST registration number.
An invoice is only required where the supply falls under the “Specified GST/HST regime," i.e., where RecruitiFi makes a supply to an “specified Canadian recipient," which is an Employer that didn’t provide their GST/HST number to RecruitiFi.
Legislative reference: Section 211.16 of the ETA.
What if I’m an Employer in Saskatchewan?
There may be special tax considerations at a provincial level if you are based in Saskatchewan. If this is the case, please contact RecruitiFi at support@recruitifi.com.
CANADA CONSIDERATIONS FOR RECRUITERS
This section of the FAQ applies to Recruiters in Canada that supply services to RecruitiFi.
Will a Recruiter charge GST/HST to RecruitiFi?
No, services provided by a Recruiter to RecruitiFi are GST/HST-free, i.e., zero- rated.
Why are services from a Recruiter not subject to GST/HST in Canada?
Under the Canadian rules, the supply of a service made to a non-resident recipient is zero-rated for GST/HST purposes, unless the service is specifically listed in section 7 of Part V of Schedule VI to the ETA, which is not the case here.
As RecruitiFi is a non-resident company in Canada, the supply of services received from the Recruiter qualifies as a zero-rated supply. Thus, Recruiters will not charge GST/HST on their supply of services to RecruitiFi.
Legislative reference: Section 7 of Part V of Schedule VI to the ETA.
Does anything change depending on where the Employer, JobCast, and/or Candidate is located?
No, this does not matter. Other factors, such as the location of the Employer, Candidate and/or JobCast does not change the GST/HST treatment as explained above.
The GST/HST treatment is determined by the nature of the Recruiter’s services and location of Recruiter as service provider and RecruitiFi as service recipient; the location of Employer, Candidate, and/or JobCast are not relevant to determine the GST treatment.
Is the service subject to any other taxes in Canada?
No, the services provided by Canadian Recruiters to RecruitiFi in Canada are not subject to other Canadian taxes.
In this regard, RecruitiFi’s Terms stipulate that any Agency Placement Fee and other fees payable to Recruiters are inclusive of any GST and other taxes.
GLOSSARY
Term | Definition |
RecruitiFi | RecruitiFi, Inc. |
JobCast | Job positions to be filled by Candidates that are submitted/suggested by Recruiters to RecruitiFi |
Recruiter | Recruiters and agencies that provides services to RecruitiFi by submitting/suggesting Candidates to fill JobCasts |
Employer | Employers that hire the services from RecruitiFi to receive the suggested Candidates by RecruitiFi to fill their JobCasts |
Employer placement fee and processing fees | Fees paid by employer to RecruitiFi — if certain conditions are met — upon hiring a Candidate |
Agency placement fees | Fees paid by RecruitiFi to Recruiter — if certain conditions are met — upon placement of a Candidate suggested by the Recruiter |
VAT | Value-added tax; please note “VAT” will be understood to include all non-US indirect taxes (e.g., VAT, GST, JCT) |
5. DISCLAIMER
The information in these frequently asked questions (FAQs) is intended to provide general guidelines regarding the indirect tax treatment of RecruitiFi Inc.’s (“RecruitiFi” or “we”) procurement of Services from Recruiters and supply of Services to Employers in the countries here covered.
The information in these FAQs is provided by Ernst & Young LLP (EY) and is solely provided for the use of RecruitiFi. The information that EY provided to RecruitiFi is to be understood based on a “should” level of advice regardless of any wording (such as “is“ or “will”) referenced in the information provided to RecruitiFi or as reflected in the FAQs.
The FAQs reflect how, in general, i.e., not in specific cases, RecruitiFi believes the local indirect tax rules apply to RecruitiFi’s business model and services supplied by Recruiters to RecruitiFi and services provided by RecruitiFi to Employers.
The FAQs for individual Member States in the European Union (EU) are not based on the individual Member State’s value-added tax (VAT) legislation. Instead, this information is based on VAT rules as included in Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT (the EU VAT directive). As the implementation of the rules in the EU VAT directive into the legislation of an individual Member States may vary country by country and/or the interpretation and corresponding guidance in relation to these rules may also be different between EU Member States, it’s possible that the FAQs for an individual EU Member State may not fully reflect the VAT rules of that EU Member State.
Recruiters, Employers and/or any party other than RecruitiFi cannot, in any form, rely on advice provided by EY to RecruitiFi. Recruiters and Employers are encouraged to consult their own (indirect) tax advisor to confirm the indirect tax treatment as applicable in their specific case as the application and impact of tax laws can vary widely, from case to case, based upon the specific or unique facts involved that are not known to RecruitiFi and/or EY. If your (indirect) tax advisor’s advice does not correspond with the position as outlined in the FAQs, please reach out to RecruitiFi’s tax team.
While RecruitiFi used its best efforts in preparing these FAQs, RecruitiFi makes no representations or warranties with respect to the accuracy or completeness of the content in the FAQs. Neither EY nor RecruitiFi shall be liable for any damages in relation to the information included in the FAQs. Note also that inadvertent errors can occur, and tax rules and regulations often change.
Latest update: January 2025