Place-of-supply rules determine which province's GST/HST rate applies to a sale, generally based on where the customer receives the goods or services.
Because Canada's provinces charge different combined tax rates (5% in Alberta, 13% in Ontario, 15% in the Atlantic provinces), the place-of-supply rules decide which rate applies. For most goods it is where they are delivered; for many services it is the customer's usual location or address on file, not the seller's.
This means a business in one province routinely charges different rates to customers in different provinces. Getting place of supply wrong, charging your home province's rate to every customer, is a common error that leads to over- or under-collected tax and CRA adjustments.
A Toronto business sells services to a client in Calgary. Under the place-of-supply rules it charges 5% GST (Alberta's rate), not Ontario's 13% HST, because the customer receives the service in Alberta.
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