Introduction
Interior designers in Canada often work across both residential and commercial settings — redesigning a family home one week, specifying furniture for a commercial tenant fit-out the next. The HST treatment of design services is the same in both contexts — design services are a taxable supply — but the interaction between services and goods, the treatment of disbursements, and the documentation requirements differ enough that it is worth understanding the full picture.
Design Services Are Taxable
Interior design services provided in Canada by a GST/HST registrant are a taxable supply — 13% Ontario HST applies to fees charged to clients in Ontario, regardless of whether the client is residential or commercial.
This means:
A residential interior designer charging $8,000 for a design concept must charge $1,040 HST (13%), collect it from the client, and remit it to the CRA net of eligible input tax credits.
A commercial interior designer charging $40,000 for a complete design and specification package charges $5,200 HST on those fees.
There is no residential exemption for design services. Unlike new residential construction (which has specific HST new housing rebate rules) or health services (which are exempt), design services are fully taxable.
When Does Design Become Supply of Goods?
Interior designers who purchase goods on behalf of clients — furniture, fixtures, materials — and resell or supply those goods as part of the project face an additional HST dimension.
Where the designer acts as principal — purchasing goods in their own name and then supplying them to the client — the designer is making a taxable supply of goods. HST is charged on the full resale price to the client. The designer claims ITCs on the original purchase price.
Where the designer acts as agent — purchasing on behalf of and at the direction of the client, with the client ultimately paying the supplier — the designer is not making a supply of goods. The designer's fee for procurement services is taxable; the underlying goods transaction is between the client and the supplier.
Whether a designer acts as principal or agent in a specific transaction depends on the terms of the engagement and who bears the risk of the goods. This distinction should be clear in the client agreement.
Disbursements to Clients
Designers frequently pass through costs to clients — renderer fees, engineer consultations, permit applications, travel. The HST treatment of disbursements depends on the same principal/agent distinction:
Where the designer pays as agent on behalf of the client and recovers only the actual cost, the disbursement recovery may not attract additional HST (the designer was not making a supply — they were acting on behalf of the client).
Where the designer pays in their own name and then invoices the client at cost (or with a markup), the recovery is part of the designer's taxable supply — HST applies to the full amount invoiced.
Keeping disbursements characterised as agent payments (with receipts in the client's name or clearly documented as client payments) can avoid double-HST treatment on costs that were originally subject to HST at the supplier level.
Input Tax Credits for Designers
An interior designer registered for HST is entitled to claim ITCs for HST paid on business inputs — studio rent, design software, sample purchases, professional development, vehicle costs (to the extent of business use), and goods purchased for resale.
For a designer in a province where the studio and most clients are in Ontario (13% HST), the ITC system effectively makes HST a flow-through: HST collected from clients minus HST paid on inputs equals the net remittance.
When to Speak With a CPA
Interior designers who handle both the creative and procurement dimensions of projects — acting as principal on some purchases and agent on others — benefit from a CPA review of how their invoicing structure aligns with their HST characterisation. Inconsistency between the economic arrangements and the HST treatment is a risk that surfaces in HST audits.