E-commerce has exploded in recent years and tax changes have been taking place in some Canadian provinces since 2020. Therefore, any Quebec company that sells goods or services online, including the sale of software or telecommunications services in those territories, will need to revise their tax obligations to reflect recent developments.

In connection

If a Quebec SME sells online in Canada, they need to know the GST/HST rate that will be charged to the buyer (5%, 13% or 15%) and the different rules that apply depending on the country Type of delivery shall apply: movable goods, services or intangible goods.

However, three Canadian provinces namely British Columbia, Saskatchewan and Manitoba also have their own provincial sales tax system, the PST, which is not a sales tax like the GST and the QST. “The PST, which has rules that differ from the GST/QST, can present certain application challenges for Quebec businesses unfamiliar with how it works,” said Mélanie Camiré, Senior Director of Indirect Taxes at BDO Canada.

Floating Bonds

The applicable tax changes are consistent with legislation enacted by the governments of Canada and Quebec for non-resident businesses selling online in Canada. “The goal is to make the application of taxes fair by forcing certain non-resident companies to register for the GST/HST and QST systems,” concludes Ms. Camiré.

Regarding western states, the obligations vary depending on whether a company is selling through its own website or that of a third party. These rules apply to the provision of services, tangible or intangible property. Consider a Quebec apparel company that sells its products online to consumers in Manitoba, Saskatchewan, and British Columbia. If the sale is made through a platform owned by a third party, the platform will charge the customer GST and PST.

“In general, the platforms collect GST from the consumer, but require that it is the Quebec entity that remits GST to the government, while Manitoba, Saskatchewan and British Columbia collect PST (effective July 1, 2022) and must be paid to the government through the platform and the Quebec company would not need to register in that province if all sales were made through a third party platform,” explains Mélanie Camiré. “ On the other hand, if the Quebec company sells through its own platform, it would need to determine whether its sale is taxable and collect the GST and the PST – and therefore register for the aforementioned provinces’ PST system if the others conditions were met. »

Professional support

It is critical that Quebec businesses that sell goods and services online, including software or computer services, decide whether to register for these three provinces’ PST or risk penalties. To ensure their compliance, they can contact a professional. “At BDO we offer our customers a complete service, which means that we first analyze the customer’s situation and, if we determine that registration is necessary, we do it for them and draw up their bills. In some cases, if a registration is not made in time, we can make a voluntary disclosure that avoids paying penalties,” specifies Ms. Camiré. She adds that companies can also consult BDO experts to check whether a new product they want to sell online is taxable or not.

Do you have questions about the tax obligations of your company that sells online outside of Quebec? Contact the indirect tax team from BDO Canada!