Charging Provincial Sales Taxes on Online Sales
Learn how to handle taxes for online sales in Canada
Online businesses in Canada are taxed just as offline, brick-and-mortar businesses are, so they typically must charge and remit other province's sales taxes. Different rules in different provinces can make the process complicated.
There is little businesses can do to get around the additional paperwork and bookkeeping related to online sales. Some Canadian-based online businesses limit where they are willing to ship goods. An Ontario-based business, for instance, might accept orders from and ship only to customers in Ontario. Others sell only nontaxable goods or services.
Canada provincial sales taxes (PST), which vary by province, and a 5% federal goods and services tax (GST). Some provinces use a harmonized sales tax (HST), which combines their provincial rate with the GST.
Businesses should register as a provincial sales tax vendor with each of the provinces where they will be doing business, then collect and remit the sales taxes accordingly.
The rules are simple for businesses selling goods or services within their own provinces or territories. They follow only the tax rules for the applicable provinces or territories. For example, Ontario uses the HST at a rate of 13%, Ontario businesses charge only that 13% rate when selling online to a customer in Ontario.
However, businesses selling goods or services to customers in separate provinces that use the HST must charge the HST rates of the shipping destination. For example, if a business in Ontario sells an item online to someone in Nova Scotia, the business would charge 15% HST, which is the rate in Nova Scotia.
Alberta, the Northwest Territories, Nunavut, and Yukon have no PSTs, so businesses charge only the 5% GST when selling online to customers in those locations.
Out-of-Province Vendors and PSTs
British Columbia, Manitoba, Saskatchewan, and Quebec charge PSTs. Those provincial governments generally want out-of-province vendors to collect and remit the applicable PSTs, but they each approach it differently.
- British Columbia: Whether or not businesses conducting online sale are expected to collect and remit B.C.'s PST is determined by whether or not the business specifically targets customers in B.C. Proactively soliciting sales in the province through advertising or similar means generally constitutes targeting customers there.
- Manitoba: Out-of-province businesses must register as a vendor if they solicit sales in the province, the orders originate in the province, the purchased goods are used in the province, and the goods are shipped to the province.
- Saskatchewan: The province expects all businesses selling online orders to customers in Saskatchewan to collect and remit PSTs.
- Quebec: The Quebec Retail Sales Act states that out-of-province businesses should register before selling taxable goods to Quebec residents.
Rates by Province or Territory
Applicable taxes and their rates for Canada's provinces and territories, as of 2019, are:
- Alberta: 5% GST
- British Columbia: 5% GST and 7% PST
- Manitoba: 5% GST and 7% retail sales tax (RST)
- New Brunswick: 15% HST
- Newfoundland & Labrador: 15% HST
- Northwest Territories: 5% GST
- Nova Scotia: 15% HST
- Nunavut: 5% GST
- Ontario: 13% HST
- Prince Edward Island: 15% HST
- Quebec: 5% GST and 9.975% Quebec sales tax (QST)
- Saskatchewan: 5% GST and 6% PST
- Yukon: 5% GST