GST/HST for online sellers: you charge the rate of the province you ship to

For goods, the GST/HST you charge is set by where the order is delivered, not by where your business sits. Ship to an Ontario address and the sale generally carries 13% HST. Ship the same item off the same shelf to Alberta and it carries 5% GST. Your province does not enter into it.

Everything else an online seller deals with — registration, marketplace collection, the payout that never matches the sales report — hangs off that one rule, which the CRA calls place of supply. The tax is decided by the shipping address at checkout, which means it has to be right before the parcel leaves, not reconstructed at quarter-end.

Two rate families, and a provincial tax that never shows on your return

So your store needs the customer’s province at the moment of the sale, and it needs to apply the right rate to it without anyone checking.

In the participating provinces, the federal and provincial pieces are combined into a single HST that you charge, report and remit on one return — Ontario’s 13% is the version everyone has seen. Everywhere else you charge 5% GST, and any provincial sales tax is a genuinely separate tax: separate registration, separate return, separate government. British Columbia, Saskatchewan, Manitoba and Quebec each run one. None of them appear anywhere on your GST/HST return, which is how a seller who has filed every GST/HST return on time discovers a provincial account eighteen months behind.

The rule has edges worth naming and not stretching. Digital products and services follow different place-of-supply rules than physical goods, so the answer above does not read across to a downloadable file or a subscription. Sales to customers outside Canada are generally zero-rated — you charge 0% and still claim the credits on the Canadian costs behind them.

Registration is a threshold you cross, not a box you tick

Registration becomes mandatory once your taxable revenue passes a small-supplier threshold the CRA sets. It is measured on a rolling basis rather than against your fiscal year, so the crossing rarely lines up neatly with a year-end. Below it, registering is optional.

The part that bites is that crossing is an event with a date. After that date the tax is owed on your sales whether or not you charged it, and the CRA collects it from you — not from the several hundred customers who received their parcels months ago. A seller who grows through the threshold in June and notices in March is not looking at a paperwork problem; they are looking at a bill for tax they never collected.

Registering before you have to has a shape rather than a verdict. From the day you register you charge the tax, you file every reporting period, and input tax credits — the GST/HST you paid on inventory, packaging, shipping, ads and platform fees — become recoverable, subject to being registered and holding the supporting documentation. For a seller who buys stock before selling it, the credits generally start before the sales do. The filing dates follow your reporting frequency.

The marketplace may collect the tax; the return is still yours

Rules exist that make some online platforms responsible for collecting and remitting the tax on sales made through them, in place of the seller. Where they apply, an order can arrive with tax charged and remitted by the platform even though the inventory, the margin and the customer are all yours.

Which platforms are caught, and which of your sales they cover, turns on the platform’s own status and the type of supply — and this is the corner of GST/HST most reliably described wrongly in seller forums. A platform that hosts your own storefront on your own domain is generally not in the same position as a marketplace that sells to its own customers. Confirm your specific platforms against their documentation and your own registration rather than against a general rule, including this one.

Three things marketplace collection does not change:

• Your own direct sales. Orders through your own store are generally yours to charge, report and remit, even when identical orders on a marketplace are not.
• Your obligation to file. A registered seller files returns for its reporting periods regardless of who collected what.
• Your input tax credits. The tax on your inventory, freight and fees is still yours to claim, and it does not move to the platform.

Three orders, three provinces

Illustrative. Round numbers, December 31 year-end, one C$200 product, three orders in the same quarter.

The Ontario order: C$200 plus 13% HST is C$26 of tax and C$226 charged. All C$26 is GST/HST, on one return.

The Alberta order: C$200 plus 5% GST is C$10 and C$210 charged. Alberta levies no provincial sales tax, so that C$10 is the whole tax on the sale.

The third order ships to a province that charges GST plus its own provincial sales tax. The GST/HST side is identical to Alberta — 5%, C$10 — because that piece is federal and does not vary by province. The provincial tax rides on top at a rate that province sets, under a separate registration, remitted to the province, and it appears nowhere on the GST/HST return. The rate is not stated here because provincial rates move on provincial budgets.

So C$600 of identical sales produced C$46 of GST/HST, one provincial account and three different totals at checkout. If the quarter’s inventory, freight and platform fees carried C$14 of recoverable tax, net tax for the period is C$32.

Then the Alberta customer returns the item and you refund C$210, including the C$10 of GST. Generally you do not go back and amend the earlier return: the refunded tax comes back as an adjustment reducing net tax in the period you issue the credit, supported by a credit note. Net tax C$22. Chargebacks and platform-initiated refunds are worth confirming separately — they do not always travel the same route.

Gross sales and net deposits are different numbers

This is where online sellers’ books actually break, and it is not a tax problem until it is.

The platform does not deposit what your customers paid. It deposits what they paid, less its fees, less refunds it processed, less chargebacks and any reserve it is holding, on its own settlement schedule. The figure that lands in the bank is a net of at least four things and matches no line on your GST/HST return.

Book that deposit as revenue and three errors arrive together. Sales are understated. Tax collected is understated to nothing, because the tax rode in on the gross and left with the netting. And the platform fees are never recorded at all, so the recoverable tax generally sitting inside them is never claimed. The correction is mechanical: the payout report is the source document and the bank deposit is only the confirmation. Each payout gets split back into gross sales by province, tax collected by province, fees, refunds and reserve movements — then it reconciles, and the return has something to be built from.

Why the quick method usually loses for a goods seller

The quick method lets you remit a flat percentage of tax-included sales and keep the spread, in exchange for giving up input tax credits on operating costs. A goods seller’s largest cost is inventory, and inventory carries tax. There is a lower remittance rate for businesses that mainly resell goods, which narrows the gap; it rarely closes it. Imported stock sharpens the point — GST paid at the border is generally recoverable by the importer of record, and the election gives that credit away too. The election is an annual test, and for a seller it usually fails.

What Cadence does

We set the tax codes in your store and your billing system so the right rate applies by destination, confirm which of your platforms is collecting on your behalf and which is not, and check whether a provincial registration is owed anywhere you ship. Then the payout reports get reconciled to gross sales and to the bank every period, so the GST/HST return is built from your sales ledger rather than from deposits. Where the store, the processors and the inventory records can be integrated, that reconciliation runs inside monthly bookkeeping — which is why the fit for online sellers and retailers depends on the systems underneath more than on the tax work itself.