GST/HST and Electronic Commerce

GST/HST Technical Information Bulletin B-090
July 2002

This Bulletin does not replace the law found in the Excise Tax Act and its Regulations. It is provided for your reference. As it may not completely address your particular operation, you may wish to refer to the Act or appropriate Regulation or contact any Canada Customs and Revenue Agency (CCRA) tax services office for additional information. If you are located in the Province of Quebec, please contact the Ministère du Revenu du Québec (MRQ) for additional information.

Table of Contents


This bulletin explains the Canada Customs and Revenue Agency's (CCRA's) interpretation of key provisions of the Excise Tax Act (the "Act") relevant to electronic commerce, and outlines how the CCRA's administrative policies pertain to transactions made by electronic means. For the purposes of this bulletin, all references to "electronic commerce" relate only to supplies made over the Internet.

The technology underlying electronic commerce facilitates the delivery of products and services by suppliers to customers located throughout the world. A business will often have no physical presence in its customers' jurisdiction, or its only physical presence in that jurisdiction may be a server (i.e., a computer that holds the files for one or more Web sites). Products (e.g., publications) that could previously be supplied solely in a tangible form can now be supplied electronically in a digitized form, and services that once required the physical presence of personnel at a customer site may now be performed from a remote location by electronic means. These aspects of electronic commerce fundamentally alter the way business is conducted and raise several interpretative issues concerning the administration of the GST/HST.

The following issues are dealt with in this bulletin:

Characterization of supplies

The characterization of supplies (i.e., determining whether the supply is one of property or services) is fundamental to the application of the GST/HST, as it affects the place where a supply is considered to be made, the tax rate that applies to a supply, the manner in which tax is collected, and the timing of liability for tax in respect of a supply. Supplies made by electronic means (including digitized products) are considered to be either intangible personal property or services.

Place of supply

The GST/HST applies at a rate of 7% GST or 15% HST to taxable (other than zero-rated) supplies of intangible personal property and services made in Canada, including such supplies made by electronic means. The legislation includes place of supply rules to determine whether a supply is made in Canada. Special rules also apply to determine whether a supply made in Canada is made in any of the HST participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador.

Supplies to non-residents

A supply of intangible personal property or a service made in Canada, including supplies made by electronic means, may be relieved of tax under the export provisions of the Act that zero-rate certain supplies of intangible personal property and services made in Canada to a non-resident person.

Non-resident registration

Every non-resident person, other than a small supplier, who is carrying on business in Canada and is making taxable supplies in Canada, including supplies made by electronic means, is required to register for GST/HST purposes and to charge GST/HST on its taxable (other than zero-rated) supplies made inCanada. As well, a non-resident person who has a permanent establishment in Canada (which could include a server) is treated as a resident of Canada, and is subject to the same GST/HST obligations as a domestic supplier in respect of activities carried on through that permanent establishment.

Registration requirements

In the context of electronic commerce, every person who makes a taxable supply of intangible personal property or services in Canada in the course of a commercial activity engaged in by the person in Canada must register for GST/HST purposes, unless the person is a small supplier, or a non-resident person who does not carry on any business in Canada.

Non-resident persons (other than small suppliers) making taxable supplies of intangible personal property or services in Canada are required to register for GST/HST purposes if the supplies are made through a permanent establishment in Canada, or in the course of carrying on business in Canada. For example, a server at a particular location in Canada could constitute a permanent establishment of a non-resident person (refer to the discussion in "Non-Resident Registration"), and the person would be required to register for GST/HST purposes if the person makes taxable supplies in Canada through that permanent establishment (unless the person is a small supplier).

Voluntary registration

A person who is not required to register for the GST/HST may voluntarily apply to register if, amongst other things:

  1. the person is engaged in a commercial activity in Canada;
  2. the person is a non-resident who, in the ordinary course of carrying on a business outside Canada:
    • has entered into an agreement to supply services to be performed in Canada; or
    • has entered into an agreement to supply intangible personal property that is to be used in Canada, or that relates to either real property situated in Canada, to tangible personal property ordinarily situated in Canada, or to services that are to be performed in Canada.

For more detailed information concerning non-resident registration, refer to Non-Resident Registration.

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