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Digital creators: that 30% platform withholding is mostly optional.
Course platforms treat non-US creators\u2019 earnings as royalties and withhold 30% of US revenue by default. The Canada-US treaty cuts that to 10% — often 0% — with one properly completed W-8BEN. Meanwhile 30-plus states now tax digital products, and whether that\u2019s your problem depends entirely on who processes your checkout.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
Withholding: the treaty does the heavy lifting
Platforms like Udemy classify instructor revenue as copyright royalties — 30% US withholding for foreign creators with no paperwork on file. A valid W-8BEN claiming Canada-US treaty benefits drops that to the treaty royalty rate: 10% generally, and 0% where the platform classifies payments as copyright royalties on literary or artistic works. The difference is 20–30 points of margin on every US sale, and the form expires every three years. Sell through your own Stripe checkout instead, and there's no withholding regime at all — it's business profit, treaty-exempt without a US establishment.
Who owes the sales tax depends on your checkout
| How you sell | Who handles US sales tax |
|---|---|
| Merchant-of-record platforms (Gumroad, Paddle, Lemon Squeezy) | They are the seller — they collect and remit all US sales tax. Cleanest setup for solo creators. |
| Marketplaces (Udemy, Etsy downloads) | Facilitator rules — handled for marketplace orders. |
| Course software + your own checkout (Thinkific + Stripe) | You are the merchant of record — the 30+ states taxing digital products are your problem once you cross their thresholds. |
The state map keeps moving — Louisiana began taxing digital products in 2025, Maryland added a 3% tax on data and IT services mid-2025 — and self-paced courses are taxable in most states that tax digital goods, while live-taught cohorts often aren't. Structure the offer with the map in mind.
The Canadian side is friendlier than you'd guess
Digital products delivered to non-resident customers are zero-rated exports — 0% GST/HST. Canadian customers pay their province's rate, and everything counts toward the $30,000 worldwide registration threshold. Registered creators reclaim GST on software, gear, and contractor invoices. The classic error is paying the platform's withheld US tax and full Canadian tax — the foreign tax credit exists precisely so you don't.
Sources: Udemy — W-8BEN instructor guidance · CRA — exports of services and IPP.
Common questions.
My platform withheld US tax last year. Is it lost?
Usually recoverable — as a credit on your Canadian return, and in some cases via a US refund claim. Fix the W-8BEN so it stops, then recover what\u2019s recoverable.
Do I charge GST to my American students?
No — exported digital products are zero-rated. You charge GST/HST only to Canadian buyers, once you\u2019re registered.
I sell through Gumroad. Do I have any US sales tax to file?
Generally no — a merchant-of-record platform is legally the seller and remits US sales tax itself. Your job is the income side: Canadian tax, GST/HST registration timing, and the platform\u2019s withholding paperwork.
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