Place of Supply Rules for GST/HST Explained for Canadian Businesses

Place of Supply Rules for GST/HST (Services, Goods, and Online Businesses)

If you’re incorporated and registered for GST/HST, one of the most common questions is:

“Which GST or HST rate am I supposed to charge?”

The answer depends on place of supply rules.

Many business owners assume they charge tax based on where their business is located. That is often wrong. Under the Excise Tax Act, GST/HST is a destination-based tax. The tax rate depends on where the supply is considered to be made, not where you operate from.

What Does “Place of Supply” Mean?

The place of supply is the province (or country) where a sale is deemed to occur for GST/HST purposes.

Once the place of supply is determined, it tells you:

Whether to charge GST (5%), or
HST (13%-15%), or
0% (zero-rated), or
No tax (exempt)

The rules are set by the CRA and are not optional.

Why Place of Supply Rules Matter

If you apply the wrong place of supply:

You may under-collect tax and owe it later
You may over-charge customers
CRA assessments can include interest and penalties

This is especially common for:

Service businesses
Consultants working across provinces
SaaS and online businesses
E-commerce sellers

Place of Supply Rules for Goods (Tangible Personal Property)

Goods are physical items like inventory, equipment, or products you ship.

General Rule for Goods

The place of supply is where the goods are delivered or made available to the customer.

That usually means:

The shipping destination, or
The location where the customer picks up the goods

Example

Your corporation is in Alberta
You ship goods to a customer in Ontario

Result:
The place of supply is Ontario → Ontario HST applies, not Alberta GST.

Key Point

Your business location does not control the tax rate. The delivery location does.

Place of Supply Rules for Services

Services are not tied to physical delivery, so the rules are different.

Examples of services:

Consulting
Professional services
Management fees
Marketing services

General Rule for Services

If no special rule applies, the place of supply is generally based on:

Where the customer receives the service, or
Where the service is primarily used or enjoyed

CRA looks at the customer’s location, not where you perform the work.

Example

You are in British Columbia
Your corporate client is located in Nova Scotia
The service benefits their Nova Scotia operations

Result:
The place of supply is Nova Scotia → Nova Scotia HST applies

Special Place of Supply Rules for Certain Services

Some services follow specific CRA rules, which override the general rule, including:

Transportation services
Telecommunications
Short-term accommodations
Certain repair or real-property-related services

These require extra care and should be reviewed individually.

Place of Supply Rules for Online & Digital Businesses

Online businesses often sell:

Software subscriptions (SaaS)
Digital downloads
Online courses
Memberships

These are usually treated as intangible personal property or electronic services.

General Rule for Digital Supplies

The place of supply is generally where:

The customer resides, or
The customer can use the digital product or service

CRA may look at:

Billing address
IP or account location
Contract terms

Example

Your corporation is in Ontario
You sell a monthly SaaS subscription
The customer is located in Newfoundland

Result:
The place of supply is Newfoundland → Newfoundland HST applies

Online Businesses with Customers in Multiple Provinces

If you sell across Canada:

You may need to charge different GST/HST rates depending on the customer’s province
Your invoicing and accounting systems must handle multi-rate GST/HST

This is a common risk area in CRA audits.

Zero-Rated vs Exempt Supplies (Important Distinction)

Zero-rated (0%)

Taxable, but at 0%
You still claim input tax credits (ITCs)

Exempt

No GST/HST charged
No ITCs allowed

Place of supply rules still matter, but the tax result may be 0%.

Quick Reference Table

Type of Supply	Place of Supply Based On
Goods	Where goods are delivered or made available
General services	Where customer receives or uses the service
Digital / SaaS	Customer location or place of use
Zero-rated supplies	0% tax regardless of province

Common Mistakes Business Owners Make

Charging tax based on their office location
Charging GST only when HST should apply
Assuming services follow the same rules as goods
Ignoring digital supply rules for SaaS and subscriptions

FAQs – Place of Supply Rules for GST/HST

Do I always charge tax based on my business location?
No. GST/HST is destination-based, not origin-based.

If I’m in a GST-only province, can I still charge HST?
Yes, if the place of supply is in an HST province.

Do online businesses have different rules?
Yes. Digital supplies follow intangible property and electronic commerce rules.

What if I charge the wrong GST/HST rate?
CRA can assess the shortfall, plus interest and penalties.

Do place of supply rules apply to B2B and B2C sales?
Yes. They apply regardless of who your customer is.

Final Takeaway

Place of supply rules are one of the most misunderstood areas of GST/HST. If your corporate tax filings or GST/HST returns don’t match how CRA views the place of supply, the risk of reassessment is high.

If your business:

Sells services across provinces
Operates online or offers SaaS
Ships goods Canada-wide

…it’s worth reviewing your GST/HST setup.

Coral CPA helps incorporated Canadian businesses determine the correct GST/HST treatment, clean up past errors, and stay CRA-compliant.
If you’re unsure whether you’re charging the right tax, fill out this form for a free consultation.

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