Updated Checked by the Tax-Services.ca editorial team How we check
Changing consumer behavior hits your books in two spots: what you charge and what you keep. When customers move online, the sales tax follows the delivery address, not your shop, and every discount you use to win them comes straight out of your margin. Both are simple sums once you see them.
Which sales tax applies when customers buy from another province?
The one where the goods are delivered. The CRA’s place-of-supply rules say that when goods are mailed or couriered, the place of supply is the province they’re sent to. Its own example is a British Columbia store delivering to an Ontario customer: the supplier charges 13% HST, not the BC rate.
On a $1,000 order, the GST/HST calculator shows $130.00 of HST for an Ontario delivery and $50.00 of GST for an Alberta one. Same shop, same product, $80 apart. If your checkout uses a single rate, you’re over-collecting from some customers and under-collecting from others, and any under-collected tax comes out of your pocket.
| Delivered to | Tax on a $1,000 order |
|---|---|
| Ontario | $130.00 HST (13%) |
| Alberta | $50.00 GST (5%) |
| New Brunswick, Newfoundland and Labrador, PEI | $150.00 HST (15%) |
Here’s how fast that adds up. Say a shop in Calgary ships fifty $1,000 orders a month to Ontario and its checkout charges a flat 5%. Each order is short $80 of tax, so the shop owes the CRA $4,000 it never collected from anyone. That’s real money for a small shop, and it repeats every month until somebody notices. The orders are round numbers for the sake of the example.
Provincial sales taxes in BC, Saskatchewan, Manitoba and Quebec work under their own rules, and the GST/HST calculator doesn’t model them for an online order. Check the provincial site, and when both taxes apply the CRA says the GST is worked out on the price without the PST.
Do you need to register for GST/HST yet?
If online sales are growing, maybe soon. Watch the quarter totals. A small supplier can stay unregistered while taxable revenues are $30,000 or less in every calendar quarter and in the last four quarters together, as the CRA’s general information for GST/HST registrants explains. Go over and you charge tax on the sale that crossed the line, then register within 29 days.
Selling into Canada from abroad follows a separate test. The CRA’s digital economy pages set a $30,000 threshold over a 12-month period for non-resident vendors of digital products and services to Canadian consumers. If that’s you, the page on cross-border digital supplies is the place to check.
How does changing consumer behavior hit your margin?
More than people expect. Say an item costs you $60 and sells for $100, which is a 40% gross margin. The profit margin calculator shows what cuts do to that.
| Selling price | Profit per item | Gross margin |
|---|---|---|
| $100 | $40 | 40.0% |
| $90 | $30 | 33.3% |
| $80 | $20 | 25.0% |
A 20% price cut halves your profit per item. Halves it. You’d need to sell twice as many to stand still, which is a hard ask of any promotion. The discount calculator is handy for checking the sale price and the tax on it, since tax is charged on the lower price.
How should you handle returns and refunds?
Book each return in the month it actually happens, and reverse the tax that went with the original sale along with it. Suppose a customer in Ottawa sends back a $200 item in the month after buying it. The sale and its 13% HST of $26 were reported earlier, so this month’s books should show the $200 refund and the $26 of tax coming back. Skipping that step overstates both sales and the tax you owe. If returns run high on an online line, that’s a margin story too, since every return can cost you the original shipping as well.
What can go wrong?
Check three things before you scale online. Are returns booked in the right month? Is shipping included in the amount you tax, or have you confirmed how it’s treated? Is tax charged at the delivery rate, not your own? The shipping rule isn’t something I could confirm on a CRA page, so look it up rather than guess.
Keep the order data, because the delivery address is what decides the rate on every sale, and because the CRA expects you to hold business records for six years, which is a long time to rely on memory or on a platform that may change its export format.
What about shifts nobody can measure yet? No claim is made here about how shoppers will behave next year. The tax and margin rules above hold whichever way they go.
Sources, and how they were checked
Place-of-supply and small supplier rules are from CRA GST/HST pages. The non-resident threshold is from the CRA’s digital economy pages. Tax and margin examples come from this site’s calculators on 2026 rates; the provincial HST rates match the CRA’s rates table. This is an independent guide, separate from any government body.
Frequently asked questions
Which GST/HST rate applies to an online order?
The rate of the province where the goods are delivered. The CRA's example is a BC store shipping to Ontario, which charges 13% HST.
When must I register for GST/HST?
When taxable revenues pass $30,000 in one calendar quarter or across four consecutive quarters. You register within 29 days after you stop being a small supplier.
Is the threshold different for foreign sellers?
The CRA's digital economy pages use $30,000 over a 12-month period for non-resident vendors of digital products or services sold to Canadian consumers.
How is GST worked out when PST also applies?
The CRA says to calculate the GST on the price without the PST.
Does a discount cost me as much as it looks?
Often more. On an item costing $60, a cut from $100 to $80 takes the gross margin from 40% to 25%.
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