Place of supply — why you charge Ontario's tax from Alberta

A supplier in Calgary invoices a customer in Toronto. Alberta has no provincial sales tax, so the invoice carries 5% GST — right?

No. It carries 13% HST, because the rate follows the place of supply, and for that sale the place of supply is Ontario.

The general rules#

Canada has one federal tax and several provincial ones layered on top, and the place-of-supply rules decide which layer applies. They differ by what you are selling.

Goods are supplied where they are delivered or made available. Ship a product to an address in Nova Scotia and you charge Nova Scotia's rate, whatever province the warehouse sat in.

Services generally follow the customer's business address — specifically, the address you obtain in the ordinary course of business that is most closely connected with the supply. If you have one address for a client and it is in Manitoba, the supply is made in Manitoba.

Intangibles and digital supplies — software licences, subscriptions, downloadable content — follow a similar test based on where the customer is located and where the property may be used.

There are specific rules that override these for particular supplies: real property follows the location of the property, passenger transportation follows the origin of the journey, and services performed on goods follow where the goods are when the work is done. If your business lives in one of those categories, the specific rule wins.

Why this trips people up#

The instinct is that tax is something you charge, so it should follow your registration and your province. It does not. Your registration determines whether you charge at all; the place of supply determines the rate.

The practical consequence for a business selling across the country is that you are collecting several different taxes at once — 5% on an Alberta sale, 13% on an Ontario one, 15% on a New Brunswick one — and remitting them on a single GST/HST return. That is normal, and the return is designed for it.

The provincial layer is a separate question#

Getting the province right is only half of it. Whether the provincial portion applies depends on what you sold.

The five HST provinces fold both taxes into one rate, so once you know the province you know the number. But British Columbia, Saskatchewan and Manitoba run their own retail sales taxes alongside GST, and those taxes have their own rules about what is taxable. Most services are outside them. A consulting invoice to a client in British Columbia carries 5% GST and no PST; a sale of goods to the same client carries 5% GST plus 7% PST.

Quebec is different again: QST at 9.975% is administered by Revenu Québec rather than the CRA, which means a separate registration and a separate return.

Account	Debit	Credit
1200 · Accounts Receivable	1,130.00
4000 · Sales		1,000.00
2310 · GST/HST Payable		130.00
Total	1,130.00	1,130.00

That third line is the one worth internalising. Sales tax you collect is not income. It is money you are holding on behalf of a government, and it sits as a liability until the return is filed. Businesses that treat it as revenue tend to discover the problem at exactly the wrong moment.

Exports and zero-rating#

Supplies to customers outside Canada are usually zero-rated: taxable at 0%. That is not the same as exempt, and the difference matters. A zero-rated supply is still a taxable supply, so you can claim input tax credits on everything you bought to make it. An exempt supply carries no tax and no credits — the tax you paid on your costs is yours to absorb.

For a business that exports most of what it makes, this is why the GST/HST return is usually a refund rather than a payment, and why filing more frequently is often worth the extra administration.

Getting it right in practice#

The rate is a function of two things you already know at the moment you raise an invoice: where the customer is, and what you are selling. Once those are recorded against the customer and the item, the rate is a lookup rather than a decision — which is how it should be, because a decision made per invoice is a decision that will eventually be made wrong.

If you want to check a specific case, the GST/HST rate tool applies the place-of-supply rules to a province and a supply type and shows the breakdown. And if you are not yet registered, the threshold tool works out whether you have crossed the $30,000 line and from which day you would start charging.