GST/HST and e-commerce

The GST at 5% is a tax that applies to the supply of most goods and services in Canada. The provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador, referred to as the participating provinces, harmonized their provincial sales tax with the GST to create the HST. Generally, the HST applies to the same base of goods and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain designated items. For more information, see Reason code 16.

As of July 1, 2010, Ontario harmonized its retail sales tax with the GST to implement the HST at the rate of 13% and British Columbia harmonized its provincial sales tax with the GST to implement the HST at the rate of 12%. Also, as of July 1, 2010, Nova Scotia increased its HST rate from 13% to 15%. For the rates of each province, see GST/HST rates.

Registrants collect the GST/HST on most of their sales and pay the GST/HST on most purchases they make to operate their business. They can claim an input tax credit to recover the GST/HST paid or payable on the purchases they use in their commercial activities. GST/HST zero-rated supplies refers to a limited number of goods and services that are taxable at the rate of 0%.

All of the rules related to GST/HST also apply to business conducted through the Internet.

If you make a taxable supply of goods or services in Canada in the course of a commercial activity you must register for GST/HST purposes, unless you qualify as a small supplier, or you are a non-resident person who does not carry on any business in Canada, (see GST/HST Memoranda Series Chapter 3.4, Residence).

The characterization of supplies – whether it is property or a service – is fundamental to applying the law related to GST/HST. It affects the place where the supply is considered to be made, the tax rate that applies to the supply, the way the tax is collected, and the timing of the tax liability. Supplies made by electronic means (including digitized products) are considered to be either intangible personal property or services.

For more information specific to the GST/HST and electronic commerce, see Technical Information Bulletin B-090 – GST/HST and Electronic Commerce.