Who this is for
- Canadian online stores, run by a sole proprietor, partnership or corporation, that ship to buyers in several provinces
- Sellers who ship into BC, Saskatchewan, Manitoba or Quebec, or whose payouts and tax report differ
Not covered here
- Small-supplier registration in depth, and PST, RST or QST registration tests
- Sales to US buyers, and GST on goods you import
- Marketplace sales where the platform collects the tax
- US-dollar payouts and exchange entries
Do I have to charge GST/HST on my Shopify sales, and from which order?
A registered seller charges GST/HST on its taxable orders, however small its sales. An unregistered seller must register once its worldwide taxable sales pass $30,000 and it stops being a small supplier. The first taxed order depends on how the limit is passed, as the two cases below show. Until then a small supplier may stay unregistered and not charge (CRA; RC4022). A small supplier can also choose to register voluntarily: a registrant may claim input tax credits (a credit for the GST/HST paid on business costs such as inventory and apps), but must then charge the tax.
The test counts worldwide taxable sales from all your businesses, and your associates' if they were associated with you at the start of the quarter, zero-rated sales included, over one calendar quarter or the last four. Financial services, capital property and goodwill are left out, and an amount counts when it is paid or becomes due. When to register for GST/HST has the details.
- One quarter passes the limit: you charge on the supply that made you pass it, and your registration is effective no later than that supply.
- Only the four-quarter total passes: you stop being a small supplier at the end of the month following the quarter in which you exceed the limit, and you charge from your first sale after that.
A case stops being simple when the store sold before registering, charged tax before it had a registration number, ships into BC, Saskatchewan, Manitoba or Quebec, mixes store and marketplace sales, sits beside another business or associated company that also sells, or has payouts and tax reports that differ by amounts you cannot trace. Gather sales and tax reports by order date and payment date, the delivery province of each order, refunds, payout reports, bank deposits, the registration date and the other business's taxable sales.
CRA says to register within 29 days of the effective date (CRA). The effective date can be earlier than the day you apply, so a store that notices late has already sold taxable orders without tax. What to do first is in the last section, on selling without collecting.
Which GST/HST rate goes on an out-of-province Shopify order: mine or the buyer's?
The province the goods are delivered to, which is usually the buyer's. The rate follows the delivery, not where the seller or the store is (CRA). Shipping the buyer reimburses does not change the place (Memorandum 3-3-3, paragraph 15 and Example 5).
| How the order reaches the buyer | Province that sets the rate |
|---|---|
| You ship by mail or courier | The province of the delivery address (paragraph 13) |
| You arrange the carrier for the buyer and ship to a destination named in the sale | That destination's province (paragraphs 13 and 14) |
| The buyer collects it, or uses a carrier they arranged themselves | The province where legal delivery happens, usually where the buyer takes possession at your door (paragraphs 11 and 16 and Example 2) |
An Ontario store charges GST, not Ontario HST, on an order delivered to Calgary, and HST on an order delivered to Toronto. The full rate table, and the rules for services and digital products, are in charging GST/HST, PST and QST by province. Test the store: place orders to addresses in several provinces and compare the tax shown with CRA's rates.
What changes for buyers in BC, Saskatchewan, Manitoba and Quebec?
GST still applies at its own rate in these four provinces. A separate provincial tax is added on top only when the seller is registered for it, or must be.
| Buyer's province | Separate tax | General rate | Registered with |
|---|---|---|---|
| British Columbia | PST | 7% | BC |
| Saskatchewan | PST | 6% | Saskatchewan |
| Manitoba | RST | 7% | Manitoba |
| Quebec | QST | 9.975% | Revenu Québec |
Each is a separate registration with its own tests and returns. Provincial sales tax covers BC, Saskatchewan and Manitoba, including marketplace rules. Doing business in Quebec covers QST.
A store outside BC can have to register for BC PST before it delivers taxable goods into BC, if it solicits BC customers (targeted online advertising counts) or passes BC's revenue limit. Goods held in BC at the time of sale, such as in a BC fulfilment house, have their own rule (PST 001). The tests are in provincial sales tax.
Is Shopify shipping taxed, and how is it split proportionally on a mixed order?
BC PST applies to the delivery charge on taxable goods and splits it on a mixed order. For GST/HST, CRA has no page written for an online store's shipping line, so confirm the treatment with CRA or a professional before locking a rule into the store.
GST/HST. Two CRA answers written for other situations point the same way. RC4027, for a registered non-resident seller delivering goods to customers in Canada, applies tax to the total amount invoiced, freight included, whether or not freight is a separate line; goods delivered outside Canada at the shipping point, with the buyer liable for the freight, are treated differently. GI-202, for local delivery by self-employed drivers through platforms, apportions the delivery charge between separate supplies of goods taxed differently, each portion following its goods, and has the tax follow the goods when goods and delivery are a single supply, so delivered basic groceries are zero-rated as a whole. It also says a delivery service supplied separately from the goods follows the delivery's destination, whatever the goods' tax status, so confirm which the store sells before giving shipping a product's tax status. Neither covers a store directly.
BC PST. PST applies to the delivery charge on taxable goods delivered from outside BC to a BC buyer, and on goods delivered from within BC when the charge is incurred at or before ownership passes to the buyer, as with delivery chosen at checkout. On a mixed delivery under that timing, PST applies only to the share of the charge reasonably attributed to the taxable goods, by price, item count, weight or another reasonable method. A PST collector outside BC charges PST on delivery too; a BC buyer of an unregistered outside seller pays PST directly (PST 302, Examples 3 and 4 and "Taxable and Non-Taxable Goods Included in Same Delivery").
Saskatchewan, Manitoba and Quebec set their own rules for delivery charges. Confirm each before copying BC's method.
Which Shopify orders carry no GST/HST, and what proof do I keep?
Zero-rated goods and exports carry no tax because the rate is zero, exempt supplies carry none, and an unregistered small supplier charges none.
| Order | GST/HST | What to keep |
|---|---|---|
| Zero-rated goods, such as basic groceries or prescription drugs | Taxable at zero in every province (CRA) | The product's tax status in the store. The sale still counts toward the small-supplier limit and goes on line 101. |
| Exempt goods or services | No GST/HST, and generally no input tax credits for the related costs (CRA) | The same product status record |
| Goods you mail or courier to an address outside Canada | Can be zero-rated as an export (CRA) | An invoice naming the goods and the buyer, and the shipper's receipt (Memorandum 4-5-2, paragraphs 16 and 21) |
Records are usually kept for 6 years from the end of the year they relate to (CRA; RC4022). Rules for US buyers, including services and buyers who collect goods in Canada, are in charging GST/HST to US customers. The difference between zero-rated, exempt and out of scope is in exempt, zero-rated and out of scope.
Should my Shopify prices include tax or have tax added at checkout?
Either works if each invoice or receipt shows the tax amount clearly or states that the price includes the tax (Excise Tax Act, s. 223). Tax added at checkout shows each order's own tax line, whatever the province.
With tax-included prices, one price sold in two provinces nets different revenue, because the rate follows the delivery province. The tax inside a total is a fraction of it, not the rate applied to it; CRA's reverse calculator shows the amount before tax. The method and the wording are in tax-included prices and GST/HST.
Does Shopify file or pay my GST/HST, and which settings must I check?
No, not by default. Shopify's help page says tax is the seller's responsibility and that Shopify does not file or remit taxes unless the seller uses its own filing product. It also says its default rates are updated regularly and the seller must confirm they are current and correct (Shopify help). Ask Shopify whether any filing service covers a Canadian GST/HST return, as its settings and products change. The duty to charge, report and remit stays with the registrant (RC4022).
| Setting | What to check |
|---|---|
| Default rates | Each province against CRA's rates |
| Where tax is on | Add BC, Saskatchewan, Manitoba or Quebec tax only after checking that province's registration test |
| Delivery address | Test orders to several provinces, and check local pickup |
| Shipping | Whether shipping is taxed and how mixed orders are split, confirmed as in the shipping section |
| Product tax status | Zero-rated and exempt products set one by one |
| Prices | Tax-included or added at checkout, matching what the receipt says |
| Tax reports | GST/HST kept apart from PST, RST and QST |
How do payouts, fees and refunds fit with the tax collected?
A payout is a net amount, not a sales figure. It equals orders paid, including the tax collected, less refunds, fees and chargebacks, plus or minus timing. Book the sales and the payout separately.
| Piece | In the books | Effect on tax |
|---|---|---|
| Orders paid | Sales before tax, and tax collected in its own account, GST/HST apart from PST or QST (recording GST/HST in your books) | Tax is payable on the earlier of payment received and the due date, which CRA usually takes as the invoice date, so the period follows that day, not the payout or order date (CRA; Excise Tax Act, s. 168) |
| Refunds | Reduce sales and tax collected | Tax refunded is deducted on line 107 in the period the credit note is issued, only to the extent it was already in net tax. A credit note carries the information the regulations require. Do not also net the refund off line 103 (Memorandum 12-2, paragraphs 15, 23 and 24; Excise Tax Act, s. 232(3)) |
| Payment and app fees | Expense | If the fee invoice shows GST/HST, it may be an input tax credit on line 106, to the extent the fee is for your commercial activities (CRA) |
| Chargebacks, holds, reserves | A hold or reserve is money owed to you, not a sale. A lost chargeback is a cancelled or reduced sale, an unpaid customer debt or another loss: the processor's decision alone does not say which | None for a hold. A cancelled or reduced sale follows the credit-note row. A debt that stays a sale needs the bad-debt rules: arm's-length customer, debt written off, original tax reported and remitted, return filed within 4 years after the due date for the write-off period (Excise Tax Act, s. 231) |
| Payout deposited | Bank, against the amount the payment service still owes you | None |
To match one payout to the sales behind it:
- List the orders, refunds, fees and chargebacks the payout covers from the payment report.
- Add the order totals with tax, subtract the rest, and compare the result with the bank deposit.
- Explain any gap as timing (orders paid after the cutoff), a hold, or a missing item.
- Add payments taken outside the payment service, such as manual payments or another gateway, and invoices whose tax became payable in the period but are not yet paid. They never reach the payout but still carry tax.
- At period end, carry orders paid but not yet paid out as a balance, not as sales.
Payouts in US dollars add exchange entries: see US-dollar sales and marketplace payouts.
Which lines of the GST/HST return come from the store's reports?
Lines 101, 103 and 107 come from the store's reports; line 106 comes from your bills. Line 109 is the result (CRA instructions).
| Line | CRA's description | Where it comes from |
|---|---|---|
| 101 | Total sales and other revenues: revenue from supplies, zero-rated and exempt included; PST, GST and HST not included | The store's sales report, set to the dates tax became payable, with exports and zero-rated orders. Not the payout report. |
| 103 | GST/HST collected or collectible | The store's tax report, GST/HST only, before refunds you claim on line 107. If the report is already net of refunds, do not claim them again |
| 104 | Adjustments to be added to the net tax | Rarely from the store |
| 106 | GST/HST paid or payable (ITCs) | Supplier bills: inventory, shipping labels, apps, fees that show GST/HST |
| 107 | Adjustments to be deducted when determining the net tax | Tax refunded to customers under credit notes, and tax on qualifying bad debts |
| 109 | Net tax | Calculated from the lines above |
PST, RST and QST do not go on these lines. Quick Method filers calculate net tax differently (CRA); see the Quick Method guide. How often and how to file is in filing GST/HST and input tax credits. If line 101 and the profit and loss disagree, see return does not match the books.
I've been selling without collecting GST/HST: what do I do first?
Work out the date registration was required first, because it drives what was owed. What to change, bill or file for past orders depends on your facts, and penalties and interest can run meanwhile. A seller that was required to charge the tax and did not is still liable for it (RC4022), and a late return with tax owing draws a penalty of 1% of the amount owing plus 25% of that for each complete month late, up to 12 months, and interest (CRA).
For a corporation, directors can also be personally liable with it for unremitted net tax, interest and penalties (Excise Tax Act, s. 323), but only after collection against the corporation fails or it is dissolved, in liquidation or bankrupt. Reasonable care is a defence, and CRA cannot assess a director more than two years after they last ceased to be a director.
- Total taxable sales across all your businesses and your associates, worldwide, zero-rated included, by the date each amount was paid or became due, and find the first quarter or four-quarter window that passed the limit. The effective date is no later than the supply that made you pass the limit in one quarter, or your first supply after small-supplier status ended over four (CRA). Check whether you registered, and when.
- Rebuild the orders since that date by delivery province, and work out the tax each should have carried. Check BC, Saskatchewan, Manitoba and Quebec orders for their own registration tests.
- Set the store's tax to start where the test says: the crossing order under the one-quarter test, the first order after small-supplier status ends under the four-quarter test. Under the one-quarter test the crossing sale carries the tax even if you are not yet registered (RC4022).
Whether the tax sits on top of the price customers paid or inside it depends on what the checkout, invoices and terms said. Where they said nothing there is no automatic answer, and CRA assesses on the facts either way (CRA Policy P-116, issued 1994, which CRA says may not reflect later law changes). CRA's Voluntary Disclosures Program may give relief case by case, but only for an application made before an audit or investigation has started, and it has other conditions: read them on that page before filing anything. Whether to bill customers and how to file missed periods depend on your facts. See registered but did not charge GST/HST and when to register.
Example
These examples are illustrative. Amounts are in Canadian dollars and before tax unless stated.
An Ontario store sells across Canada
An Ontario store, registered for GST/HST all year and using the regular method, sells C$60,000 of ordinary taxable goods in a year, with no shipping charged. C$40,000 goes to Ontario buyers at 13% HST, which is C$5,200. C$20,000 goes to Alberta buyers at 5% GST, which is C$1,000. Tax collected is C$6,200. Line 101 shows C$60,000 and line 103 shows C$6,200. Charging Ontario HST on every order would have collected C$7,800, and Alberta buyers would have paid C$1,600 too much.
A BC buyer orders a taxable item and a book
A BC buyer orders a C$90 item that is taxable for PST and a C$30 book that is exempt from PST, with C$12 shipping chosen at checkout, from a store registered to collect BC PST. Split by price, the shipping is C$9 to the taxable item and C$3 to the book. BC PST applies to C$99, which is C$90 plus C$9, and not to the book or its C$3. If both items are taxable for GST and the shipping is taxed with the goods, GST at 5% on the same order is C$6.60, which is 5% of C$132.
A new store passes the limit
An unregistered seller with no other taxable sales or associates opens a store on January 1 and sells C$12,000 of ordinary taxable goods a month, each paid at checkout. It has C$24,000 by the end of February. Orders in March take the quarter's total past C$30,000. The order that crosses the limit is the first that carries GST/HST, and earlier orders carry none. The registration is effective no later than that order.
Different for you?
- The store has sold without collecting, or you are not sure when registration was required: see registered but did not charge GST/HST and when to register, and get bookkeeping help to rebuild past orders by province.
- The store charged GST/HST before you had a registration number: see charged GST/HST before registering, and get bookkeeping help to trace what was collected.
- You ship into BC, Saskatchewan, Manitoba or Quebec: see provincial sales tax and doing business in Quebec, and get bookkeeping help to work out which tax applies where.
- You sell in the store and on a marketplace: see when a marketplace collects GST/HST, and get bookkeeping help to keep the two apart in your books.
- CRA has written to you or started a review, or a corporation owes GST/HST it did not remit: see GST/HST reviews and audits and unfiled returns and estimated assessments, and get bookkeeping help to assemble the records before you reply.
- Payouts and the tax report differ by amounts you cannot trace: see return does not match the books, and get bookkeeping help to set up a monthly payout-to-return routine.
- The store charged the wrong rate on past orders: see charged the wrong GST/HST rate, and get bookkeeping help to rebuild the orders by delivery province.
- Your buyers are in the US: see charging GST/HST to US customers.
- You import stock, or a supplier outside Canada ships to your customers: see GST on imports and customs invoices.
Figures on this page
| Figure | Value | Source |
|---|---|---|
| GST/HST small supplier threshold Worldwide taxable sales, including zero-rated supplies, with associates, in one calendar quarter or over the last four consecutive calendar quarters; excludes financial services, sales of capital property and goodwill | $30,000 | CRA: When to register for and start charging the GST/HST Checked |
| When small-supplier status ends if only the four-quarter total passes the limit Registration is effective no later than the day of the first supply you make after you stop being a small supplier | The end of the month following the quarter in which you exceed the limit | CRA: When to register for and start charging the GST/HST Checked |
| GST/HST application window after first taxable supply made other than as a small supplier CRA's most-business examples say register within 29 days of the effective date; Excise Tax Act subsection 240(2.1)(b) sets the general trigger | 29 days | CRA: When to register for and start charging the GST/HST Checked |
| British Columbia PST general rate | 7% | British Columbia: Provincial sales tax (PST) Checked |
| Saskatchewan PST rate | 6% | Saskatchewan: Provincial Sales Tax Checked |
| Manitoba retail sales tax (RST) rate | 7% | Manitoba Finance: Retail Sales Tax Checked |
| Quebec sales tax (QST) rate Charged in addition to GST | 9.975% | Revenu Québec: Collecting the QST Checked |
| Usual GST/HST records retention period Generally from the end of the last tax year to which the records relate; long-term property records and other exceptions can require longer retention | 6 years | CRA: GST/HST records to keep Checked |
| GST/HST bad-debt deduction filing window Return claiming the deduction must be filed within this period after the due date of the return for the reporting period when the supplier wrote off the debt under Excise Tax Act subsection 231(4). | 4 years | Justice Laws: Excise Tax Act, section 231 Checked |
| GST/HST late-filing base rate Of amount owing at the filing due date | 1% | CRA: GST/HST filing penalties Checked |
| GST/HST late-filing monthly share Share of the base penalty per complete late month, up to 12 months | 25% | CRA: GST/HST filing penalties Checked |
| Time limit to assess a director for unremitted corporate GST/HST after leaving office Measured from the date the person last ceased to be a director under Excise Tax Act section 323(5) | Two years | Justice Laws: Excise Tax Act, section 323 Checked |
Primary sources
- CRA: When to register for and start charging the GST/HST
- CRA: GST/HST and place-of-supply rules
- CRA: GST/HST calculator and rates by province
- CRA: GST/HST Memorandum 3-3-3, place of supply of tangible personal property
- CRA: Doing Business in Canada, GST/HST information for non-residents (RC4027)
- CRA: Delivery Services Involving Platforms (GST/HST Info Sheet GI-202)
- CRA: Tax status of your supply
- CRA: GST/HST on imports and exports
- CRA: GST/HST Memorandum 4-5-2, exports of tangible personal property
- Excise Tax Act, section 223
- Excise Tax Act, section 231
- Excise Tax Act, section 232
- Excise Tax Act, section 323
- Excise Tax Act, section 168
- CRA: Policy P-116, collection of GST by a supplier where the invoice is silent on tax payable
- CRA: GST/HST filing penalties
- CRA: Voluntary Disclosures Program
- CRA: GST/HST records to keep
- CRA: General Information for GST/HST Registrants (RC4022)
- CRA: Instructions for preparing a GST/HST return
- CRA: Calculate the net tax
- CRA: GST/HST Memorandum 12-2, refund, adjustment or credit under section 232
- BC: Bulletin PST 001, Registering to Collect PST
- BC: Bulletin PST 302, Delivery Charges
- Shopify Help Center: Taxes (vendor documentation, used only for what the platform does)
About this guide
Published by Cloud Accounting under standing professional approval. This version has no separately recorded personal review. It explains general rules for the tax year shown. It is not advice for your situation.
Changes
- : First published.