Place of supply: which province’s GST/HST rate do you charge?

Charging the wrong provincial rate is a common GST/HST error, and easy to fix. Ask not “where am I?” but “where was this supply made?”

The rates, and which provinces they apply in

Once you know the place of supply, the rate follows mechanically. A zero-rated supply is taxed at zero per cent everywhere in Canada. For other taxable supplies the CRA sets out the rates as:

British Columbia is a non-participating province, so a supply made in BC carries 5% GST, and, where it applies, BC provincial sales tax is charged separately on top rather than being harmonized into a single rate.

Goods: follow the delivery

For a sale of goods, the place of supply is determined by where the goods physically end up under the terms of the deal:

• If the supplier delivers the goods or makes them available to the customer, the place of supply is the province where they are delivered.
• If the supplier mails or couriers the goods, it is the province they are sent to.
• If the supplier ships the goods to a destination specified in the contract for carriage, or transfers them to a common carrier retained on the customer’s behalf for that purpose, it is the province they are shipped to.

The CRA’s example: an Alberta store sells to an Ontario buyer. Legal delivery is in Alberta, but the goods ship to an Ontario address, so delivery is considered to occur in Ontario and its rate applies. If the customer collects at the store, the place of supply is the store’s province.

There is even a rule for goods that never arrive: the place of supply is the province where they were supposed to be delivered.

Services: follow the address

Services do not move, so the rule attaches to the customer instead. The general rule is that a supply of a service is made in the province where the supplier obtains a home or business address of the recipient in the ordinary course of its business, and that address is in that province.

Without such an address, a single other Canadian address of the recipient is used. With no Canadian address at all, the supply is made in a participating province if more than 50 per cent of the Canadian services are performed in participating provinces, in the one with the greatest share.

If the greatest proportions tie between participating provinces, the highest of those rates applies. If the services are performed primarily in non-participating provinces, or equally between the two groups, the supply is made in a non-participating province and GST at 5 per cent applies.

The service rules that override the general one

Several kinds of service do not follow the address at all. Each of these has its own rule, and each overrides the general one rather than bending it.

Personal services

A personal service is one performed all or substantially all (90 per cent or more) in the physical presence of the recipient, like a haircut. Advisory, consulting and professional services are not personal services, so accountants, lawyers and consultants follow the address rule. Personal services are supplied where primarily performed, with the highest participating-province rate on ties.

Services in relation to real property

These follow the property. If the service relates to real property in Canada situated primarily in participating provinces, HST applies at the rate of the province where the greatest proportion of the property sits. If the property is primarily in non-participating provinces, or split equally, GST at 5 per cent applies.

Services in relation to goods that stay put

A service performed on tangible personal property that remains in the same province while the Canadian part of the service is performed generally follows the province where that property is situated. Repair work sits here.

Leases, rentals and vehicles

A lease or licence giving continuous possession for three months or less uses the delivery test. For more than three months, each interval is a separate supply, placed by where the goods ordinarily are, so a leased asset moving provinces can change rate mid-term. Specified motor vehicles generally follow the province of registration.

Two practical checks

First, confirm the supply is taxable before worrying about the rate. Exempt means no tax; zero-rated means zero everywhere. Our guide to zero-rated versus exempt supplies sorts that out.

Second, make your invoicing system apply the rule: set the default tax code on each customer record. Still deciding whether to register? Start with the GST/HST registration guide, and check invoices with the GST/HST calculator. Sellers shipping across BC should read our notes for online sellers, where the delivery rule bites hardest.

Whether any of this applies to you turns on your year-end, your structure and what else is in the picture — ask about your own situation and a CPA replies, usually the same business day. Free either way.

Place of supply decides the rate; the rest of the GST/HST rules covers what to do with it once you have charged it.

This article is general information, not tax advice for your specific situation. Tax rules and CRA administrative positions change — confirm anything that affects a decision with the CRA or with us first.