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Consignment service in $US funds

Expert: Tony Frost

Elizabeth asked:

I have recently added a consignment service to my small business, ALL my sales are in US Funds and ALL my consignors are Ontario residents. I wish to pay them in US Funds (they are agreeable) but I do not know if the GST/PST charged on my services as an agent can be calculated in foreign currency (USD)? Will I have to convert everything to CAD? (It is much easier if I can keep everything in a single currency.)

Tony Frost answered:

Although there may be administrative and accounting issues involved in charging in U.S. dollars, the author does not see any obvious legal issues.

Parties are free to choose to contract in any currency and the legal obligation to collect GST and PST remains the same regardless of the currency. For purposes of filing your income tax returns, you will of course need to convert to CDN dollars.

You should be careful of consignment arrangements as they can often be characterized as security arrangements in law and, if so, will require a security agreement and registration to retain legal priority to the assets.

About the author

Tony Frost is a litigation, commercial and estate lawyer with Mills & Mills LLP located at Yonge and St. Clair in Toronto. Click here for Tony's Profile.

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