GST/HST and e-commerce

The GST is a 6% tax on the supply of most goods and services in Canada. Three participating provinces (Nova Scotia, New Brunswick, and, Newfoundland and Labrador) harmonized their provincial sales tax with the GST to create the harmonized sales tax (HST). HST applies to the same base of goods and services as GST, but at the rate of 14%. Of this, 6% is the federal component and 8% is the provincial component.

GST/HST registrants who make taxable supplies of goods and services (other than zero-rated sales) in the three participating provinces collect tax at the 14% HST rate. They collect tax at the 6% GST rate on taxable supplies of goods and services they make in the rest of Canada (other than zero-rated supplies). 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 apply to business conducted through the Internet.

If you make a taxable supply of goods or services in Canada (place of supply) 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.

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 further information that is more specific to the GST/HST and electronic commerce, refer to Technical Information Bulletin B-090 – GST/HST and Electronic Commerce.