Drop-shipments to unregistered persons

If you instruct a GST/HST registrant to deliver goods in Canada to an unregistered consignee such as a consumer, GST/HST is payable when the registrant delivers or transfers the goods to the recipient. GST/HST is as follows:

• based on the fair market value of the goods, if the registrant transfers physical possession of the goods in Canada to you or to a third person; or
• nil, if you provide the goods to a customer free of charge and the registrant transfers physical possession of the goods to the customer in Canada on your behalf.

These rules also apply if a registered consignee does not issue a
drop-shipment certificate to the GST/HST registrant.

Forms and publications

• Guide RC4027, Doing Business in Canada - GST/HST Information for Non-Residents
• GST/HST Memoranda Series Chapter 3-3-1, Drop-shipments