- GST/HST is a single federal tax administered by the CRA, but the rate isn't identical everywhere.
- For tangible goods, the place of supply generally follows where the goods are delivered to, or made available to, the customer — not where your warehouse sits or where the order was placed.
- Services are generally sourced to the location most closely connected to the customer — commonly the address on file for the customer in your records.
An Ontario business rarely sells only to Ontario customers anymore. The moment an order ships to Alberta, a client is billed in British Columbia, or a subscription is sold to someone working remotely from Quebec, a quiet but important question shows up: which province's sales tax rate applies to that transaction? Canada's place of supply rules answer that question, and they don't always point to the seller's own province.
Getting this wrong runs in both directions. Charge Ontario's rate on a sale that should have used a different province's rate, and you've either overcharged the customer or under-remitted to the CRA. Get careless about it across enough transactions, and it becomes the kind of pattern that surfaces on a GST/HST audit.
This article explains the general logic behind the place of supply rules — not as a substitute for transaction-by-transaction advice, but so you understand why the "right" rate isn't always the one on your own storefront.
Why the Place of Supply Matters
GST/HST is a single federal tax administered by the CRA, but the rate isn't identical everywhere. Some provinces have harmonized their sales tax with the federal GST into a single HST rate; others charge GST alone or apply their own separate provincial sales tax alongside it. Ontario's own rate is set at the federal and provincial levels together — as of mid-2026 it sits at 13% — but a different combined rate can apply once a supply is treated as having occurred in another province. Rates for other provinces change on their own schedule, so always confirm the current rate for the destination province before you invoice; do not assume it matches Ontario's.
The place of supply rules exist to assign each transaction to a single province for tax purposes, regardless of where your business happens to be registered or headquartered.
The General Rule for Goods
For tangible goods, the place of supply generally follows where the goods are delivered to, or made available to, the customer — not where your warehouse sits or where the order was placed. A common carrier shipment, a pickup at a store, and a drop-shipped order from a third-party supplier can each point to a different answer depending on the delivery terms of the sale. Businesses that ship across provincial lines regularly need a system that captures the delivery address on every order, not just the billing address.
The General Rule for Services
Services are generally sourced to the location most closely connected to the customer — commonly the address on file for the customer in your records. This gets more complicated when a customer gives you addresses in more than one province, or when the service itself is performed partly in different locations. The Excise Tax Act sets out a hierarchy of factors for these situations, and applying it correctly to an unusual fact pattern is exactly the kind of question worth putting to a tax professional before you lock in your invoicing practice.
Digital Products and Intangible Property
Digital products, licences, and other intangible property follow their own sourcing logic, which can turn on where the property can be used or, again, the customer's address on record. Genuine exports of goods and services outside Canada are generally treated differently again, often at a zero rate rather than under the domestic place of supply rules at all. If your business sells digital products, subscriptions, or licences to customers across provinces (or countries), this is an area where a general understanding isn't enough — the rules are technical enough that a wrong assumption can go unnoticed for years.
Quick Reference
| Type of supply | What generally determines the applicable rate |
|---|---|
| Tangible goods (shipped or delivered) | Where the goods are delivered to, or made available to, the customer |
| Services | Generally the customer's address on record, subject to more detailed tie-breaker rules |
| Digital products and intangible property | Often the customer's address or where the property can be used, depending on the type |
| Real property | The province where the property is physically located |
| Genuine exports | Frequently zero-rated rather than governed by the ordinary place of supply rules |
Common Mistakes That Invite a Closer Look
- Assuming your own province's rate always applies. This is the single most common error among businesses that only recently started selling beyond Ontario.
- Using the billing address when the delivery address controls (or vice versa). The two aren't interchangeable for every supply type.
- Not updating point-of-sale or invoicing systems when the business starts serving a new province for the first time.
- Treating every other province as "GST-only." Several provinces are themselves harmonized at a different combined rate, and that rate is not Ontario's.
Frequently asked questions
Do I charge my own province's HST rate, or the customer's province's rate?
It depends on the type of supply and where it is deemed to occur under the place of supply rules — not simply on where your business is registered. Goods, services, and digital products each follow different sourcing logic.
What happens if I've been charging the wrong rate for a while?
You may owe the CRA the difference if you undercharged, and you may need to correct invoices or issue refunds if you overcharged. A tax professional can help you assess exposure and whether a voluntary correction is appropriate.
Does this apply to a small business that only occasionally sells out of province?
Yes — the place of supply rules apply regardless of your sales volume. Registration thresholds are a separate question from which rate applies once you are registered.
Is this the same as deciding whether to register for HST at all?
No. Place of supply rules assume you already have a registration obligation and are asking which rate to charge; registration thresholds determine whether you must register in the first place.
This is a tax question
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