Tax · For businesses

Which sales tax do I charge?

Pick the province whose rate applies to the sale and get the tax and invoice total. Below: the CRA place-of-supply rules that decide which province that actually is when your customer is somewhere else.

You charge the rate of the province where the supply is made, which is not necessarily where your business sits. The CRA calls this the place of supply, and it is decided by the type of thing you sold: goods follow where they are delivered, services generally follow the customer’s address as you hold it on file, and anything to do with real property follows where the property is.

So a Toronto consultancy invoicing a Calgary client normally charges Alberta’s 5% GST, not Ontario’s HST. A Vancouver shop shipping a mattress to Ontario charges Ontario’s 13% HST. Same seller, different tax, because the rule looks at the transaction rather than the letterhead.

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Canadian sales tax overview

How the CRA decides which province’s tax you charge

There is one question behind every out-of-province invoice, and the CRA has a name for it: where was the supply made? Get that wrong and you have either short-charged a customer and owe the difference, or over-charged them and collected tax you must still remit. The answer depends entirely on what you sold, and the rules split into four families.

Goods, where they are delivered

For tangible goods, the place of supply is where the goods are delivered or made available to the customer. Delivery follows the sale agreement, and handing the goods to a carrier on the customer’s behalf still counts as delivering to the destination. The CRA’s own worked example: a British Columbia store selling a mattress to an Ontario customer and delivering it in Ontario has made an Ontario supply and charges 13% HST.

Counter-intuitive corollary: if that same Ontario customer walks into the BC shop and carries the mattress out, the supply happens in British Columbia and BC rates apply. Nothing about the customer’s home province matters; only where the goods changed hands.

Services, where your customer’s address is

Services run on a different logic. The general rule looks at the home or business address of the recipient that you obtained in the ordinary course of business: the address in your CRM, on the signed engagement letter, on the invoice you send. This is the rule that governs most consulting, design, agency, bookkeeping and remote professional work in Canada.

If you hold more than one address for the same customer, you use the one most closely connected with that particular supply. If you hold no address at all, the rule falls back to where the greatest proportion of the service was actually performed. Practical consequence: the address you record at onboarding is a tax decision, not an admin detail, and it is the document the CRA will ask to see.

Real property, where the property is

Land, buildings, and services in relation to them (construction, renovation, property management, real estate commissions, appraisals, cleaning of a specific building) are supplied where the property sits. A Toronto contractor renovating a cottage in New Brunswick charges New Brunswick’s rate, and an Alberta property manager looking after an Ontario building charges Ontario’s.

Intangibles, where the rights can be used

Software licences, franchise rights, memberships, intellectual property and similar intangibles turn on where the rights may be exercised, with the customer’s address used as the tie-breaker when the rights are Canada-wide. This is the family most likely to need professional advice, because a licence drafted without territorial limits and a licence limited to one province produce different answers.

What this means for how you invoice

Once you are registered, the tax on an invoice is a function of the customer, not of you. That has three practical consequences. Your invoicing system needs the customer’s province as a required field, not an optional one. Your quoted prices should be stated plus applicable taxes if you sell across provinces, because “$1,000 all-in” means a different margin in Alberta than in Nova Scotia. And your GST/HST return reports the tax by rate, so mixing rates without tracking them makes the return unfileable without reconstruction.

None of this changes what you keep. The tax you charge is never revenue: you are collecting it on the CRA’s behalf and remitting it, less the input tax credits you claim on the GST/HST you paid on your own business purchases. What place-of-supply changes is the rate on the invoice and the reporting line it lands on.

The trap: PST and QST do not follow these rules

Everything above is the GST/HST system, administered federally by the CRA. It does not govern the provincial sales taxes that British Columbia, Saskatchewan and Manitoba run themselves, and it does not govern Quebec’s QST, which Revenu Québec administers on its own legislation.

Those are separate taxes with separate registration rules, separate returns and separate audit powers. A business outside British Columbia can be required to register for and collect BC PST on sales into the province, and the same pattern applies in Saskatchewan, Manitoba and Quebec. Being registered for GST/HST does nothing for you there.

So the real compliance picture for a business selling across Canada is one federal registration plus a possible registration in each of up to four provinces, each with its own thresholds and its own definition of a taxable sale. That is why a single “Canadian sales tax rate” is a fiction: the number on the invoice is a combined result of two or three separate tax systems that happen to be printed on one line.

If you only need the arithmetic (tax on an amount, or tax stripped back out of a total) the GST/HST calculator is the tool for that. This page is for deciding which rate belongs there in the first place.

TNAADO Inc. · Toronto

The rate follows your customer, not your business

Which rate you charge is settled by the place-of-supply rules, which look at where your customer receives the good or service rather than where your business is registered. An Ontario supplier billing a customer in another province generally charges that province’s rate, not Ontario’s. That is why "what do I charge?" has no single answer for a Canadian business, and why the province selector is the whole tool rather than a convenience.

The mistake people make. Registering late. You are a small supplier, and generally must not charge GST/HST at all, until taxable revenue passes $30,000 over four consecutive calendar quarters. The moment you cross it the obligation starts, not at the start of the next year. The other common error is treating collected tax as revenue: it is held on the Crown’s behalf and remitted, with input tax credits claimed against it, so it never belonged to the business.

Frequently asked questions

Do I charge my own province’s sales tax or my customer’s?

Your customer’s, in most cases. GST/HST is charged at the rate of the province where the supply is made, and for services that is generally the home or business address of the customer that you obtained in the ordinary course of business. Your own location is not the deciding factor.

The exceptions matter. Goods follow where they are delivered, so a walk-in sale is taxed where the shop is. Anything relating to real property is taxed where the property sits, whoever the customer is and wherever they live.

I am in Ontario and my client is in Alberta. Do I charge 13% HST?

No: for a service, an Alberta client’s address makes it an Alberta supply, so you charge 5% GST only. Invoicing 13% HST to an out-of-province client is one of the most common Canadian freelancing errors, and it means you have collected tax the client did not owe.

It cuts the other way too. An Alberta consultant with an Ontario client charges Ontario’s 13% HST even though there is no HST in Alberta, because the rate follows the supply and not the supplier.

Do I have to register for GST/HST at all?

Only once you stop being a small supplier: the threshold is $30,000 in taxable revenue over four consecutive calendar quarters. Below it, registration is optional and you charge nothing. Above it, registration is mandatory and you must begin charging on the place-of-supply rules.

Registering voluntarily while under the threshold lets you claim input tax credits on the GST/HST you pay on business purchases, which is worth real money if you buy equipment or subcontract. It also commits you to filing returns, so it is a trade-off rather than a free win.

What if I sell to a customer outside Canada?

Exports are generally zero-rated: the supply is taxable, but at 0%, so you charge nothing and still claim input tax credits on the costs of making it. Zero-rated is a distinct status from exempt, where no tax is charged and no credits may be claimed.

The conditions are specific and the paper trail is what proves them, so keep evidence that the goods actually left Canada or that the service was supplied to a non-resident. Digital services sold to consumers abroad, and to Canadian consumers by non-resident sellers, are governed by their own set of rules and are worth checking separately.

Do these rules apply to BC PST, Saskatchewan PST, Manitoba RST or Quebec QST?

No. Place of supply is a GST/HST concept. British Columbia, Saskatchewan and Manitoba administer their own provincial sales taxes, and Quebec administers QST through Revenu Québec, each under its own legislation with its own registration obligations.

A seller located outside those provinces can still be required to register there and collect their tax on sales in. Being registered with the CRA for GST/HST gives you nothing in those systems, so check each one separately if you sell into them.

Disclaimer

Estimates for educational purposes only. Some goods are zero-rated or exempt; verify with your accountant or the CRA for specific cases.

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