Original post here.
GST/HST is just the beginning.
Once you sell across provinces, you're dealing with PST in BC, Saskatchewan, and Manitoba - each with its own rules. Quebec has an entirely separate system (QST) with its own registration requirements.
None of them coordinate with each other.
Most business owners don't find out they have obligations until a province sends a letter - or worse, an assessment.
This is the field guide we wish more founders saw earlier. Six rules that consistently catch business owners off guard, why they matter, and what to actually do about each one. Plus a current rate reference for every province, so you can sanity-check your invoicing in 3 minutes.
Quick reference: Canadian sales tax rates by province (2026)
Before we get into the rules, here's the underlying map. If anything in this table contradicts what you're charging today, that's already a flag worth investigating.
Note: Nova Scotia reduced its HST from 15% to 14% on April 1, 2025. Quebec's QST is administered by Revenu Québec, not the CRA - it requires a separate registration.
#1 - You can owe PST in a province you've never visited
Hiring a remote employee in BC? Storing inventory in Saskatchewan? Attending a trade show in Manitoba? Any of these can create a "permanent establishment" - triggering PST obligations.
The trigger isn't your office. It's where your business touches a province, through people, inventory, or even a single transaction.
What to do: Map every province where you have employees, contractors, inventory, or regular customers. That's your actual tax footprint - not your mailing address.
#2 - Quebec's QST has a separate threshold
Most founders assume GST/HST registration covers them. It doesn't. QST is administered by Revenu Québec, not CRA - with its own rules, deadlines, and penalties.
Separate System. QST is completely independent from GST/HST. You need a separate registration.
Digital Sales Count. Even selling digitally from Ontario to Quebec customers triggers QST obligations.
If you have Quebec-based customers and you're only collecting GST, check your QST obligations today. Back-assessments here are common and aggressive.
#3 - The rate on your invoice might be wrong, and clean books won't fix it
Charging 13% HST to every customer because your HQ is in Ontario?
That's not how place-of-supply rules work.
For Services. The rate is based on where the customer is, not where you are.
For Goods. The rate depends on where the product is delivered.
CRA audits invoices, not journal entries. If the tax rate doesn't vary by customer location, something is likely wrong. Audit a sample of invoices across provinces.
#4 - Your ITCs are only as good as the paper trail behind them
Claiming Input Tax Credits on GST/HST you've paid? Good. But CRA requires specific documentation to support every claim. Missing any element (even on a handful of receipts), and CRA can disallow the entire claim on audit.
- Supplier's GST/HST registration number. Must appear on every receipt.
- Tax amount broken out separately. Can't be buried in a lump total.
- Clear business purpose. On contractor invoices, team meals, software subscriptions.
What to do: Run a spot check on your last 20 expense receipts. If more than a few are missing the supplier's GST/HST number or don't break out the tax, you have a documentation gap costing you real money.
#5 - Your filing frequency might be wrong
Still filing GST/HST annually from your startup days? Once your taxable revenue crosses $1.5M, CRA requires at least quarterly filing.
Annual Filers. Sit on collected HST all year and treat it like operating cash. When the bill comes due, the money's already spent.
Monthly Filers. Without tight month-end processes, companies end up filing late, and penalties compound fast.
What to do: Check your filing frequency against your revenue. Over $1.5M and filing annually? You're already out of compliance.
#6 - Exemptions and zero-rated supplies are not the same thing
Both mean you don't charge tax, but confusing them costs you ITCs.
Zero-Rated Supplies. Basic groceries, exports. You don't charge tax, but you can still claim ITCs on related expenses.
Exempt Supplies. Certain financial services. You don't charge tax, and you cannot claim ITCs on related expenses.
What to do: Review how each revenue stream is classified in your accounting system. If you see "exempt" anywhere, verify that's actually correct, not just a default someone set up years ago.
Sales tax compliance should not be a year-end problem
The founders who get this right have the right tax logic built into their invoicing, the right registrations in place before CRA comes asking, and an advisor who flags these issues proactively.
- Tax logic in your invoicing. Rates that vary by customer location automatically.
- Registrations before the audit. Not after the assessment letter arrives.
- Proactive advisor. Someone who flags issues before they become problems.
If you're running your business on cloud accounting tools and you're not sure whether the tax logic underneath your invoices is right - that's a 30-minute conversation that's worth having before the next quarter close, not after.
Want a second set of eyes on your sales tax setup? Book a call with our team: connectcpa.ca/contact
