Goods kept by registered suppliers

When a GST/HST registrant sells goods to you and transfers ownership, but not physical possession of the goods to you, the registrant does not charge GST/HST on the sale if the registrant keeps physical possession of the goods in order to do the following:

• transfer physical possession of the goods to you, a subsequent owner, or another person designated by you or a subsequent owner; or
• perform a commercial service on the goods for you or a subsequent owner.

The registrant assumes potential liability for the goods when physical possession of the goods is transferred to another person. The registrant is relieved of this liability when the registrant receives a drop-shipment certificate from the third party at the time physical possession is transferred.

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