As an online e-commerce business owner you are required to follow the same place of supply rules when it comes to GST/HST as it is treated the same as purchasing in store. However, when you are selling goods online to customers the application of the place of supply is generally based on the legal delivery of the goods to the recipient of the supply.
When the product is delivered within Canada then the registered business will have to charge GST/HST and the amount will depend on which province the product was delivered. If the customer is not a Canadian resident then the sales tax may be zero-rated which means it is taxed at 0%
These are the 2015 GST/HST Rates in Canadian Provinces and Territories:
- BC, 5% GST
- AB, 5% GST
- SK, 5% GST
- MB, 5% GST
- ON, 13% HST
- QC, 5% GST
- NL, 13% HST (will increase to 15% on January 1, 2016)
- NS, 15% HST
- NB, 13% HST
- PE, 14% HST
- NT, 5% GST
- NU, 5% GST
- YT, 5% GST
The business will have to charge GST/HST depending on the customers delivery address. The addresses of customers will have to be collected if a CRA auditor requests proof. Make sure to also keep your proof of purchases, payments and business transactions.
The tax rules and regulations for selling online are a lot more sophisticated then the brief over provided in this blog. Each individual product, service and mandate requires an independent overview to ensure the appropriate tax applications are made. We would suggest contacting our office to arrange a free consultation to learn more.