GST/HST and e-commerce
On this page
Overview
Register for a GST/HST account
Typical electronic supplies
GST/HST rate to charge
Related publications
Overview
E-commerce, also known as electronic commerce, refers to all transactions conducted over computer networks. This means that electronic commerce is limited to supplies of intangible personal property and services. For more information on how the GST/HST applies to supplies of intangible personal property, services, and telecommunication services, go to GST/HST rate to charge.
If you are registered for the GST/HST, you generally have to charge and collect the GST/HST on all taxable supplies of property and services that you make in Canada (other than supplies that are zero-rated).
If you are a registrant, you may be able to claim input tax credits on your GST/HST returns to recover the GST/HST paid or payable on purchases you made and expenses you paid for consumption, use, or supply in your commercial activities. For more information, see Input tax credits.
Register for a GST/HST account
You generally have to register for the GST/HST if you provide taxable supplies of property and services in Canada, unless you are a small supplier. If you don’t have to register for the GST/HST, it may be beneficial to register voluntarily. For more information, see Open or manage an account – Register.
Non-residents
If you are a non-resident and you have a permanent establishment in Canada, you are considered to be a resident in Canada in respect of activities carried on through that establishment. For more information on what qualifies as a permanent establishment, see GST/HST Policy Statement P-208R, Meaning of “Permanent Establishment” in Subsection 123(1) of the Excise Tax Act (the Act).
Examples – Permanent establishment
Example 1
You are a non-resident business and you enter into an agreement with an independent Canadian Internet Service Provider (ISP) for the ISP to host your website. The website is hosted on a server that the ISP owns and the server is permanently located in Canada. The ISP is responsible for the server on which your website is hosted.
In this case, you do not have a permanent establishment in Canada despite having your website hosted in Canada. Your website is not tangible property and does not have a physical presence in Canada. The server is not a permanent establishment because it is not at your disposal.
Example 2
You are a non-resident ISP in the business of hosting your customers' websites. The server on which the websites are hosted is permanently located in Canada. You own the server, but no employee is required at its location.
In this case, you have a permanent establishment in Canada based on the fact that your server is tangible property and is physically located in Canada. Additionally, the server is controlled by the ISP and the functions carried out through the server are considered to be a significant and essential part of the ISP's business.
If you are considered to have a permanent establishment in Canada, you must register for the GST/HST in respect of the activities carried on through that permanent establishment, unless you are a small supplier. Therefore, you need to charge and collect the GST/HST on all taxable supplies you make in Canada while carrying on a business in Canada. For more information, see Register for a GST/HST account.
The CRA considers certain factors to determine if a non-resident person is carrying on a business in Canada for GST/HST purposes. The importance of each factor depends on the nature of the business activity and on the particular facts and circumstances of each case.
Factors considered for carrying on a business in Canada
The CRA takes into account:
- the place where the non-resident's agents or employees are located
- the place of delivery
- the place of payment
- the place where purchases are made
- the place from which transactions are solicited
- the location of an inventory of goods
- the place where the business contracts are made
- the location of a bank account
- the place where the non-resident's name and business are listed in a directory
- the location of a branch or an office
- the place where the service is performed
- the place of manufacture or production
Typical electronic supplies
In this section, you will find a description of the typical supplies that are made electronically. Your supply may not fit in any category. If you are uncertain, you can request a decision from the CRA. For more information, see GST/HST Technical Information Bulletin B-090, GST/HST and Electronic Commerce.
Electronic ordering and downloading of digitized products
These supplies typically involve a customer downloading a digitized product from a supplier. This product can be software, an application, music, a game or any other product in a digital format. This category of supplies also includes a subscription to a website that allows the downloading of a digitized product. The right on the product can be permanent or temporary.
The supplies in this category are intangible personal property.
Software maintenance and other forms of technical support
Software maintenance is the modification or update of a software product after delivery to prevent or fix defects or to improve performance or other attributes. Software maintenance contracts usually include technical support.
The supplies in this category are typically considered services if a technician provides the technical support online. If the technical support is incidental to the supply and the principal object of the contract is the software updates, then the supply is considered intangible personal property. If the technical support is in the form of online technical documents or a troubleshooting database, the supply is also considered intangible personal property.
Application hosting, website hosting, and data warehousing
Hosting is a service that allows clients to have their website or software on a server owned by the host to make it available to the public or employees. This category also includes website conception and data warehousing.
The supplies in this category are services.
Supplies related to online sales
These supplies are advertisement, referral, and representation activities on behalf of online suppliers of goods and services. This category includes web-banner advertising, displaying of promotional messages, or external links.
The supplies in this category are services.
Subscription to databases and interactive websites
A database is a collection of organized and structured information on a computer support. An interactive website contains videos, images, music, games, or activities. Its main purpose is to let the subscriber interact with the website’s functionalities. These supplies typically involve a provider who makes digitized content available to customers for research, retrieval, and use.
The supplies in this category are intangible personal property.
Information provided electronically
The supplies in this category include:
- periodic electronic delivery of data (for example, news clippings)
- undisclosed technical information on a product
- professional advisory services
- content acquisition transactions (for example, a website operator acquiring various images or articles to display them on their website to attract users)
The supplies in this category are intangible personal properties or services.
If the supply is of an existing product or a product created for a group of customers who receive rights to the product, the supply is considered intangible personal property.
If making the supply involves human intervention or specific work done for a specific customer and the supply does not involve the transfer of rights, the supply is considered a service.
Telecommunication services
Telecommunication services include:
- Internet access services
- email services
- voice telephony provided through the Internet
- web broadcasting
Many supplies of services or intangible personal property that fall under another category are also telecommunication services. For example, a right to access a website where visual and audio content is broadcasted in real time is a supply of intangible personal property. However, since web broadcasting in real time is a telecommunication service, the supply is a telecommunication service.
GST/HST rate to charge
The rate of tax you need to charge for a supply is based on the place of supply. If the supply is made in a participating province, you must charge the HST that applies for that province. If the supply is made in a non-participating province, you must charge the GST of 5%. For the tax rate of each province, see GST/HST calculator (and rates).
Use the following sections to find out which place of supply rules apply to your supply.
Intangible personal property
Intangible personal property
Personal property is generally intangible if you cannot see and touch it. Supplies of intangible personal property (for example, a supply of software or a subscription to a website) usually do not involve physical interactions and do not require delivery. Your supply made electronically is usually intangible personal property if:
- your supply is a right in a product or a right to use a product for personal or commercial purposes (such as an intellectual property or a right to use intellectual property) or a temporary right (for example, a right to view, access or use a product while online)
- you provide a product that has already been created or developed
- you create or develop your product for a specific customer, but you still own the product
- your supply consists of a right to make a copy of a digitized product
You need to determine the place of supply to know which GST/HST rate to charge. For more information on GST/HST rates and place of supply rules for intangible personal property, see Intangible personal property.
Examples – Place of supply for intangible personal property
Example 1 – Supply made in Canada
You supply software to a non-resident and there are no restrictions regarding the place of use of the software. The supply of the software is considered to be made in Canada because it is a supply of intangible personal property that the non-resident may use completely or partially in Canada. Your supply is subject to GST/HST.
Example 2 – Supply made in a province
You supply software by way of a licence to a company in Quebec for its employees to use at the company's office in Ontario. The licence states that the company and employees can use the software only from the office in Ontario. The Canadian rights for the software can only be used in Ontario and since Ontario is a participating province, your supply is subject to HST (at the rate of 13%).
However, if your supply is made to a non-resident who is not registered for the GST/HST, it could be zero-rated. For more information, see Exports.
Services
Services
Electronic commerce allows services to be provided remotely (for example, software maintenance services or online advertising). Your supply made by electronic means is generally a service if all of the following applies:
- Your supply does not include providing rights, or if you do provide rights, the rights are incidental to the supply
- Your supply involves specific work that you performed for a specific customer
- There is human involvement in making your supply
You need to determine the place of supply to know which GST/HST rate to charge. For more information on GST/HST rates and place of supply rules for services, see Services.
Examples – Place of supply for services
Example 1 – Supply made in Canada
You provide computer and software technical support services online to a non-resident using your computer and your server in Canada. Your supply is considered to be made in Canada because you supplied a service using hardware located in Canada. Your supply is subject to GST/HST.
Example 2 – Supply made in a province
You provide clients with online editing and translation services. The clients come from everywhere in Canada and your business is located in Quebec. A client in Saskatchewan sends you their original documents by email. You review or translate those documents before returning them to the client by email. You perform the services from your business address in Quebec and you do not obtain an address from your client.
Since you perform the service primarily in Quebec and Quebec is not a participating province, your supply is subject to GST at the rate of 5%.
However, if your supply is made to a non-resident who is not registered for the GST/HST, it could be zero-rated. For more information, see Exports.
Special rules for computer-related services and Internet access
Special rules apply to determine in which participating province a supply of computer-related services or Internet access is made. A computer-related service means one of the following:
- a technical support service that is provided by means of telecommunications and relates to the operation or use of computer hardware or software
- a service involving the electronic storage of information and computer-to-computer transfer of information
These rules override other place‑of‑supply rules that could otherwise apply to the supplies of computer-related services and Internet access. For instance, a supply of Internet access is a supply of a telecommunication service (as discussed in the following section) consisting of the making available of telecommunications facilities.
For more information on GST/HST rates and place‑of‑supply rules for special rules for computer-related services and Internet access, see Computer-related services and internet access.
Telecommunication services
Telecommunication services
Many typical supplies of intangible personal property or services made online are also telecommunication services (for example, email or Internet access services). If a supply is considered to be a telecommunication service, it is subject to special rules with respect to the place of supply and zero-rating provisions.
Your supply is generally considered to be a telecommunication service supply if its predominant purpose is to do one of the following:
- provide for the emission, transmission or reception of signs, signals, writings, images or sounds or intelligence of any type through a telecommunications network
- make available a telecommunications facility for such emission, transmission, or reception
- provide a means through which other services or intangible personal property are delivered, rather than providing the services or intangible personal property
However, your supply is generally not considered a telecommunication service supply if any of the following applies:
- You use a telecommunication service in supplying a service or property
- The supply includes providing a telecommunication service, but only as a means of delivering another service or property
- The supply is incidental to the supply of another service or property
You need to determine the place of supply to know which GST/HST rate to charge. For more information on GST/HST rates and place of supply rules for telecommunication services, see Telecommunication services.
Examples – Place of supply for telecommunication services
Example 1 – Supply made in Canada
You are an internet service provider located in Canada that provides Internet access to resident and non-resident customers. Internet access is a telecommunication service which involves making telecommunications facilities available to customers. Your supply is considered to be made in Canada because all or part of the facilities that enable customers to connect to the Internet are located in Canada. Your supply is subject to GST/HST.
Example 2 – Supply made in a province
You provide long-distance call services by electronic means to a customer. The customer makes a long-distance call from Toronto to Montréal. The billing location for the service is in Ontario. Since the communication is emitted and billed in Ontario, your supply is considered to have been made in Ontario. Since Ontario is a participating province, your supply is subject to HST (at the rate of 13%).
However, if your supply is made to a non-resident who is not registered for the GST/HST, it could be zero-rated. For more information, see Exports.
Exports
Exports
According to the place of supply rules for intangible personal property, services, and telecommunication services, your supply may be considered to be made in Canada. However, if your supply is made to a non-resident who is not registered for the GST/HST, it could be considered an export. For more information, see Exports.
If your supply is considered an export, it could be a zero-rated supply. A zero-rated supply is a taxable supply that is subject to a GST/HST rate of 0%. However, before zero-rating your supply, you must verify that it is eligible. For more information on your supply's eligibility for zero-rating, see GST/HST Info Sheet GI-034, Exports of Intangible Personal Property, GST/HST Memorandum 4-5-1, Exports – Determining Residence Status, and GST/HST Memorandum 4-5-3, Exports – Services and Intellectual Property.
Related publications
- GST/HST Technical Information Bulletin B-090, GST/HST and Electronic Commerce
- GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province
- GST/HST Memorandum 4-5-3, Exports – Services and Intellectual Property
- Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents
- GST/HST Info Sheet GI-034, Exports of Intangible Personal Property
- GST/HST Memorandum 4-5-1, Exports – Determining Residence Status
Page details
- Date modified: