Nearly 20,000 U.S. businesses are registered for GST or PST purposes. However, many U.S. businesses have structured their operations so that they can do business with Canadians without being GST or PST registered.
New cross border GST rules have recently been introduced into law. U.S. vendors may now be able to claim input tax credits which previously were not allowed. ITC claims may in some cases be backdated.
Sales services provided to a U.S. corporation by a Canadian sales representative are typically subject to GST. However, if the goods sold by the U.S. corporation to its customer are deemed to be supplied outside of Canada the sales services will not be subject to GST. This is an important planning tool for U.S. corporations which do not wish to become GST registered.
U.S. corporations which are not GST registered are not entitled to claim GST input tax credits. However, the U.S. corporation may be able to make an election so that the ITC is not lost. Where the election is performed the ITC is transferred to another person (typically the Canadian customer). A balancing of accounts is then performed.
The Canada Revenue Agency is required when performing a GST audit to audit to net tax. This means that the CRA is required to give the non-resident credit for items which, apart from the audit, would otherwise be statute barred. These "lost" credits are critical strategic tools on audit.
Many U.S. corporations which are registered for Canadian sales taxes (provincial and federal) are not required to be registered and gain no advantage from being registered. De-registration is in most cases a relatively simple process.
The Canada Revenue Agency offers a number of incentives designed to promote compliance with GST laws. For example, in many cases if a GST error is corrected on a voluntary basis prior to audit the penalties and the interest can both be reduced to nil.
Some Canadian provincial sales taxes are collected at the Canada-U.S. border by Canadian federal authorities. If there is any dispute as to the amount collected this dispute must be resolved with the provincial authorities.
U.S. corporations which sell software or other intangibles (such as goodwill) to Canadian purchasers may be required to collect Canadian sales taxes on the sale.
The Canada Revenue Agency requires that U.S. corporations pay for the cost of travel and accommodation to the U.S. in connection with an audit. However, in most cases the books and records can be shipped to a third party location in Canada at the time of audit in order to avoid these charges.
One of the most significant sources of cross border audits is a failure to obtain proper import documentation.
American corporations which are GST registered may be required to make an election as a pre-condition to claiming GST ITCs in respect of importations into Canada.
Services provided predominantly in the United States may be subject to GST if a portion of the service is provided in Canada. For example if an installation specialist travels to Canada to assist the customer with installation of machinery then the entire service may be subject to GST. 
