GST, HST, PST and US Sales Tax at Checkout: The Basics

Sales tax for online orders in Canada and the US depends mainly on where the product is delivered and whether you are registered (or required to register) there. In Canada that means GST at 5%, or HST in participating provinces, plus any separate provincial sales tax. In the US it means state and local sales tax wherever you have nexus. This is general information, not legal or tax advice: confirm your own situation with an accountant.

Canada: GST, HST and PST in plain terms

The Canada Revenue Agency (CRA) administers the federal Goods and Services Tax. According to the CRA's general information for GST/HST registrants:

• GST is 5% on taxable supplies made in provinces that have not harmonized.
• HST applies in participating provinces that harmonized their provincial sales tax with the GST. The CRA lists New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island as participating provinces.
• Small suppliers do not have to register. The CRA defines a small supplier as one whose worldwide taxable revenue (including associates) was $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters.

Some provinces outside the HST also charge their own provincial sales tax, which the province administers itself. The CRA's page on which rate to charge notes that where PST applies, GST is calculated on the price without the PST.

We are not listing provincial rates here. They change, and your accountant or the provincial tax authority will have the current figure.

Place of supply: the delivery address decides

For physical goods, the rate you charge in Canada generally follows the delivery province. The CRA's guidance on place of supply for tangible personal property says a sale is generally made in a province if the supplier delivers the property or makes it available to the buyer in that province.

For a custom manufacturer, that has practical effects:

So the checkout needs a confirmed delivery address before it shows a final total. A tax line calculated on a billing address can be wrong for a homeowner renovating a cottage in a different province.

The US: no federal sales tax, many state rules

The US has no national sales tax. States (and many local jurisdictions) set their own. The question for an online seller is where you have nexus, meaning enough connection to a state that you must register and collect.

Historically, nexus meant physical presence: a shop, warehouse or employee in the state. Stripe's introduction to US sales tax and economic nexus explains that a 2018 US Supreme Court ruling changed this, and states can now require out-of-state sellers to collect once their sales or transaction count passes a threshold. Thresholds differ by state and change over time.

For a Canadian manufacturer selling into the US, or a US shop selling into neighbouring states, that means:

1. Track sales by destination state from the first order.
2. Check each state's threshold as you approach it.
3. Register before you start collecting.
4. Know which items are taxable in each state.

Non-resident businesses selling into Canada have their own rules too. The CRA publishes GST/HST information for non-residents.

Deposits, balances and dealer invoices

Custom orders add a timing wrinkle. A homeowner may pay a deposit today and a balance at delivery. A dealer may pay an invoice 30 days after shipping. Ask your accountant:

• When tax becomes payable on a deposit versus the balance.
• How to treat a deposit that is refunded because the order is cancelled.
• Whether dealers buying for resale should be charged tax, and what documentation you need to keep.

Our post on deposits vs. pay in full covers how deposits are usually structured on the payment side.

Sales tax for online orders in Canada and the US: what checkout should do

Whatever your tax setup, the ordering flow should make it easy to get right:

• Capture and confirm the delivery address before showing a final total.
• Show tax as its own line, labelled by type (GST, HST, PST or state tax).
• Put your tax registration number where your accountant says it belongs, such as order confirmations.
• Keep every order exportable so your bookkeeper can reconcile by province or state.

Payments landing in your own processor account help here too, because the records are in one place you control. See why payouts should land in your own Stripe account.

How Inlay handles this

• Payments run through your own Stripe account, so payment records and any tax configuration you set up there stay in your account.
• A final review step shows the customer the full order before they submit.
• Order confirmation emails are editable, so you can add the registration details and wording your accountant recommends.
• You can export every order at any time by CSV or API for reconciliation.

This post is general information, not legal or tax advice. Check with your accountant for your province, state and product mix.

Book a 20-minute demo to see a cross-border order from cart to confirmation email.