Selling Across Canada: What Rate of Goods & Service Tax (GST/HST) Do I Have to Collect?
Businesses often request some clarification regarding how much GST/HST, or PST to collect when conducting business. A common mistake that is made occurs when businesses sell goods across Canada. Often, the business charges the applicable sales tax that applies in the province their business is operating in, rather than the sales tax that applies in their customer’s province or territory.
Depending on the customer’s place of residence, the business will need to collect either a combination of GST and PST, GST only, or HST.
The following provides a brief summary of the rules regarding which sales tax to collect when selling goods across Canada.
What is GST/HST and PST?
Goods and Services Tax (“GST”): this is an indirect federal sales tax that is applied to the majority of goods and services sold in Canada.
Provincial Sales Tax (“PST”): this is a retail sales tax that is controlled by each province and applied to the sale of taxable goods and services in the province.
Harmonized Sales Tax (“HST”): this is a consumption tax that combines GST and PST.
What Rate of Goods and Services Tax (GST/HST) Do I Have to Collect When Selling Across Canada?
Below is a breakdown of the GST/HST an Ontario business must collect when selling to customers in another province (for most businesses).
- When selling goods to customers that live in HST-participating provinces, a business will be required to collect the HST on taxable goods and include it in their GST/HST return. HST-participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island.
- When selling goods to customers that live in provinces/territories that only charge GST, a business will only be required to collect GST. The provinces/territories that only charge GST include Alberta, Yukon, Northwest Territories, and Nunavut.
- When selling goods to customers that live in provinces that charge GST and PST separately, a business will be faced with tax reporting obligations if specific requirements are met. The provinces that charge a combination of GST and PST include British Columbia, Saskatchewan, Manitoba, and Quebec.
Collecting PST in British Columbia
An Ontario business must register and collect PST if it regularly does the following:
- Sells taxable goods to customers in BC
- Accepts purchase orders (including by telephone, mail, email, or Internet) for taxable goods from customers located in BC
- Delivers taxable goods to a location in BC (this includes goods shipped physically or electronically, even if the goods are delivered through a third party, such as a courier)
- Solicits customers in BC, through advertising or other means, including mail, email, fax, newspaper or the Internet, for goods and services that are taxable.
Collecting PST in Saskatchewan
An Ontario business is encouraged to register and collect PST if it regularly does the following:
- Sells tangible property to customers in SK
- Sells tangible property to customers who will consume the property in SK
- Sells or provides tangible property that will be delivered to SK
- Solicits through advertising or any other means, either directly or through an agent, orders from persons in SK
- Accepts purchase orders of tangible personal property that originate in SK.
Collecting Sales Tax in Manitoba
The Retail Sales Tax Act stipulates that an Ontario business must register and collect retail sales tax if it regularly does the following:
- Sells tangible property to customers in MB
- Causes goods to be delivered in MB
- Solicits orders which will be sold in MB, directly or through an agent, by advertising or any other means (e.g., in person, by telephone, mail, e-mail, fax, posters, television or newspaper advertisement
- Accepts purchase orders originating in MB. The order can be originated by telephone, Internet, e-mail, fax, letter or any other means from a location in MB to the seller or agent located in or out of MB.
Collecting Sales Tax in Quebec (“QC”)
An Ontario business must register and collect sales tax if it regularly does the following:
- Sells tangible property to customers in QC
- Delivers or makes tangible property available to the purchaser in QC, either by mail, courier service, or hires a common carrier
It can be tricky to know how much GST/HST an Ontario business must collect when selling goods and services in another province. Rules regarding the collection of sales tax can vary depending on the type of business, industry, and good or service sold. It is therefore recommended that you consult a tax advisor or lawyer to avoid any mistakes that can be costly.
-Julian Franch, Associate Lawyer
© Kalfa Law, 2018
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.