Canadian freelancer paid in American $?

February 28, 2017 8:16 PM

With the understanding that YANML or Accountant, can a Canadian freelancer specify payment in USD in a contract where the terms are covered by Canadian law?

I'm a Canadian freelancer putting together my first contract with a client. The client is American and I've quoted them in USD. I'm just using a freelance contract template put together by a reputable Canadian organization for my profession and it states that the terms of the contract will be covered by [my province]. Can I specify payment in USD or would I have to do a conversion from USD to CAD and show that in the contract? (I know I will have to do a conversion on my end when I go to file my taxes.)

If the client was Canadian, could I still quote in USD?

(I feel like the answers to these questions are probably really simple, but I just don't want to eff up my first contract! And because I'm just starting out and I'm freelancing, paying big bucks for a lawyer isn't happening right now.)

posted by pised to Work & Money (6 answers total)

I've always specified USD with American clients, but the contracts were always drawn up by them in their states. While I would presume any contract I drew up in Ontario would give me the right to bill in USD, I cannot absolutely confirm that.

But I would strongly suggest that you spend a few bucks (not big bucks) for an accountant's time when dealing with any American entity because the type of currency is not the only issue you'll encounter.

For example, when I invoiced one of my first American clients, they tried to get me to complete a W-9 form for the IRS. We finally sorted out that as a foreign contractor, I really needed to complete a Form W-8BEN-E. I touched base with my accountant to confirm that I filled out that form correctly.

My accountant also advised me on:
- My options for payment (cheque drawn on an American bank that could take 3 weeks or so to get mailed and clear my Canadian CAD bank account vs. cheque that I could deposit to a USD account here or in the States vs. wire payment, which is my preferred option these days).
- How to handle a finder's fee charged by a Canadian colleague who found me an American client (although my work for the American client is zero-rated re HST, the Canadian colleague has to charge me HST when invoicing me for the finder's fee).
posted by maudlin at 9:44 PM on February 28, 2017

Response by poster: Thanks, maudlin. I will give my accountant a quick call tomorrow.

To clarify things further after your comments:

- I'm contracting with individuals, not businesses, so likely will not need any IRS forms
- the work I'm doing does not need to be charged HST, and I'm not making enough yet that I would need to start charging it (I believe it's once you've made $30K in a year, and no I'm definitely not there!)
- I'm specifying payment via Paypal for now - the amounts are small enough and I don't have to worry about cheques being sent and clearing my account
posted by pised at 10:02 PM on February 28, 2017 [1 favorite]

I don't know about Canadian law specifically but certainly there are lots of international contracts where payment is specified in a currency that's not even the currency of any of the countries of the people involved in the contract, so I don't see why this is different. You could specify payment in yen or pesos or euro if you wanted. Or goats, or honey, or Toronto real estate.

Like, couldn't you ask a Canadian to pay for something in USD? Why would a US based customer be different?
posted by mskyle at 5:22 AM on March 1, 2017

pised: "If the client was Canadian, could I still quote in USD?"

Yes. In fact you can quote in anything you like such as grams of gold as long as there is an exchange of value. Tax wise it is easier if you use a denomination that can be easily and clear converted into an equivalent C$ amount (avoiding getting paid in say decorative chickens); US$ meets this requirement.
posted by Mitheral at 7:33 AM on March 1, 2017 [3 favorites]

We were looking for a Canadian freelancer recently specifically to avoid paying in USD, if I had contacted someone who replied with a quote in American dollars that would have been the sole reason for not hiring them. We asked 6 different people for quotes, and none were in USD.

So, legally yes, but be warned it may cost you business. If we had been willing to deal in USD we would have opened our search up to American freelancers.
posted by Dynex at 9:03 AM on March 1, 2017

I always specify US dollars when I'm dealing with US clients. I also specify what jurisdiction any disputes will be in and what jurisdiction's laws will apply. However, my use of US dollars is to make sure that there are no misunderstandings. And, obviously, all these things are part of contract negotiations.

If the US company wanted everything in CAD, that would be fine. I've never had a US client that wanted to deal with CAD. If they did, that would be fine. But then you really have to be clear with them, because they might not understand that CAD 500 is not the same as USD 500. You want to be clear on the understanding, so that they don't think your quote is higher than other people's.
posted by Chaussette and the Pussy Cats at 10:38 AM on March 1, 2017