The short answer
Interlining means two or more carriers work on one continuous freight movement, and only one of them invoices the shipper or consignee (the receiver). CRA treats the charges between those carriers as zero-rated. The carrier that bills the customer charges GST or HST on the whole move.
So an owner-operator who hauls under contract for a carrier usually charges that carrier 0%.
An example
A manufacturer hires Carrier A to deliver goods from Calgary to Toronto. Carrier A subcontracts Carrier B, and Carrier B subcontracts an owner-operator.
| Who bills whom | GST/HST |
|---|---|
| Carrier A bills the manufacturer | HST 13%, based on the Ontario delivery |
| Carrier B bills Carrier A | Zero-rated |
| Owner-operator bills Carrier B | Zero-rated |
The rule is the same for domestic and international moves. CRA applies it without you having to sort out the contracts between the carriers.
When interlining doesn't apply
The company hiring you is the shipper. Interlining needs at least two carriers. Say a carrier hires you to move its own pallets back to its yard. It's the shipper in that move, so your service is taxed normally. CRA gives the same answer for a contractor who owns a gravel pit and hires a dump truck to bring gravel to its road job.
You're supplying a driver, not a freight service. A self-employed driver who doesn't use their own truck and doesn't take responsibility for the move usually isn't providing a freight service. This kind of driving work isn't zero-rated as interlining. It matters for incorporated drivers, so get advice if this sounds like your setup.
The service isn't freight at all. Roadside help such as boosts and unlocks isn't a freight service by itself, even if the same company also tows vehicles.
Chargebacks still take tax
Carriers often pay for an owner-operator's fuel, repairs, maintenance or permits, then deduct the cost from settlements. These chargebacks aren't freight services, so interlining doesn't cover them. CRA says GST/HST usually applies, and the carrier charges it to the owner-operator. Registered owner-operators can usually claim that tax back as an input tax credit.
Why register if you charge 0%?
If all your work is zero-rated interlining, you collect no tax. But you still pay GST/HST on fuel, repairs and other costs. CRA points out that registering lets you get this tax back, even if you're a small supplier.
What about invoices to a broker?
CRA's freight guidance doesn't spell out this case. If a broker only arranges the move as an agent, you normally charge tax by destination. A broker that takes responsibility for the move may count as a carrier, which could make your charge zero-rated. Our calculator assumes the first case, so ask your accountant how to treat your regular brokers.
What to put on the invoice
Show the charge and mark it as zero-rated at 0%. Keep the contract or rate confirmation that shows who you hauled for. In the invoice generator, choose "I'm subcontracted by another carrier" and the tax line changes to match.
Sources
- CRA: GST/HST information for freight carriers, interlining
- CRA: GST/HST Memorandum 28-2, paragraphs 44 to 61
- Revenu Québec: Freight Transportation Services
This guide doesn't replace the law or professional advice, and rules change. Check the sources above before you rely on it.