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Why online marketplaces and e-commerce businesses should review their Canadian sales tax obligations

Online marketplace platform operators and facilitators, and other e‑commerce businesses, that did not have Canadian sales tax obligations when they first started operations may now find that they are required to register for, and collect, Canadian sales tax in one or more jurisdictions. While each jurisdiction has its own definition, very generally, an online marketplace operator or facilitator is a person that facilitates an online marketplace for sellers, and collects payment in respect of the sales made through the platform.

Canada imposes the federal GST and HST on supplies of most property and services made in Canada at rates varying between 5% and 15%, depending on the province in which the supply is made. In addition, British Columbia, Saskatchewan, Manitoba, and Quebec levy a separate provincial sales tax. While the Quebec sales tax (“QST”) legislation generally mirrors the federal GST, the provincial or retail sales tax levied in British Columbia, Saskatchewan, and Manitoba (the “PST Provinces”) is quite different. What results is five different taxing regimes that require their own individual analysis.

Generally, it is the seller or service provider that is responsible for sales tax compliance (e.g., registration, collection, remittance, and reporting) in respect of a transaction, even when the sale is completed by an agent. However, in the e‑commerce context, legislative changes announced or implemented over the last few years have shifted the sales tax compliance burden from the seller to the online marketplace platform operator or facilitator for particular transactions. In addition, what is considered taxable in the PST Provinces has expanded; how these rules operate will vary province by province.


The new Saskatchewan PST regime for marketplace facilitators and marketplace sellers went into effect January 1, 2020, making Saskatchewan the first of the PST Provinces to announce marketplace facilitator rules. In addition to certain marketplace facilitators being required to register, collect, and remit SK PST, they may also be required to charge SK PST on fees between the marketplace facilitator and the seller.

In addition, an electronic distribution service that is delivered, streamed, or accessed through an electronic distribution platform was added to the list of taxable services. This includes content delivered through an electronic distribution platform and any associated or incidental services (e.g., transaction services, processing services, and administration services). Providers of such electronic distribution services may be required to register, collect, and remit SK PST on these taxable services.


Manitoba followed Saskatchewan, amending The Retail Sales Tax Act (Manitoba) (the “MB RSTA”), effective December 1, 2021, to add provisions for online sales platform operators and online sellers. Online sales platform operators may now have registration and compliance obligations under the MB RSTA.

In addition, the Manitoba RST rules were expanded to capture streaming services and media purchases of music, most audio programs, television programs, movies or other video, and ring tones. Providers may now be required to register, collect, and remit MB RST in respect of these sales.

British Columbia

Unsurprisingly, earlier this year, British Columbia announced its intention to amend its PST legislation. Effective July 1, 2022, the Provincial Sales Tax Act (British Columbia) will be amended to add provisions for marketplace facilitators and marketplace sellers. Marketplace facilitators should consider whether they are required to register, collect, and remit BC PST in respect of sales facilitated by their platforms.

In addition, a new category of services ‑ online marketplace services ‑ will be subject to BC PST. An online marketplace service is broadly defined and includes (i) listing sales of goods, software or sales of taxable services; (ii) advertising or promoting; (iii) customer service; (iv) storage; (v) fulfilling orders or bookings; (vi) collecting or facilitating payments, either directly or indirectly, and transferring payments to the marketplace seller; and (vii) accepting or assisting with cancellations, changes, returns, or exchanges of goods, software or taxable services. Persons who provide online services will need to review their offerings and consider their BC PST compliance obligations.

Federal and Quebec

There have also been amendments to the GST/HST and QST legislation relating to e‑commerce transactions in recent years.

What does this mean for businesses?

It is recommended that any business (whether or not physically present in a province) periodically review their operations from a Canadian sales tax perspective as the relevant legislation is often amended. This is especially important for online marketplace platform operators and facilitators, and other e‑commerce businesses, as the rules have changed significantly over the last few years. A periodic review will identify any potential compliance issues prior to the commencement of an audit by a taxing authority or a due diligence review by a potential purchaser of the business.