As a business owner, you may be selling your products or services to customers located in different provinces in Canada. In this post, we will explore the rules and guidelines that businesses should follow when charging GST/HST for out-of-province sales in Canada.
In these cases, you may wonder, “what sales tax do I charge for out-of-province sales?” The answer to this question is not simple, as some different rules and exceptions apply to charge GST/HST for out-of-province sales.
The first thing to consider when selling to customers located in other provinces is whether you are required to register for GST/HST. As a general rule, you must register for GST/HST if your taxable sales exceed $30,000 in a calendar quarter or over the previous four quarters. This applies to all businesses operating in Canada, regardless of where they are located. If you are unsure whether you are required to register, you can consult the Canada Revenue Agency (CRA) website for more information.
Once you are registered for GST/HST, the business will need to charge the appropriate rate of tax for each sale based on the province where your customer is located. In most cases, this means charging GST/HST at the rate that applies in the province where the customer takes delivery of the goods or services. For example, if you are selling a product to a customer in Ontario, you would charge 13% HST (5% GST + 8% provincial sales tax) if the customer takes delivery of the product in Ontario.
However, there are some exceptions to this tax rule. For example, if you are selling goods that are shipped or delivered outside of Canada, you do not need to charge GST/HST. Similarly, if you are selling goods that are shipped or delivered to another province, you may need to charge the rate of tax that applies in the province where the goods are shipped from, rather than the province where the customer is located. This is known as the “place of supply” rule, which determines which province’s tax rules apply to a given sale.
To determine the correct tax rate for a given sale, you will need to consider several factors, including the type of product or service you are selling, the location of your customer, and the place of supply rules. In some cases, you may also need to obtain a GST/HST number from the customer to verify their tax status and ensure that you are charging the correct rate of tax. It is always a good idea to stay informed about the tax laws in each province and consult with a tax professional if you have any questions or concerns.
Taxes on selling out of provinces depends on several factors, including the type of product or service you are selling, the location of your customer, and the tax laws in each province. In general, you should charge GST/HST at the rate that applies in the province where your customer is located. However, there are some exceptions to this tax rule, and you will need to consider the place of supply rules to determine the correct tax rate. It is important to stay informed about the tax laws in each province and ensure that you are charging the correct rate of tax for each sale.
