Place of Supply Rules in Canada: How to Determine Which Tax Applies
Your location as the seller is almost never what determines the rate.
The short answer
The rate follows the customer — not the seller
“Place of supply” is the CRA’s term for the rule that determines which province’s tax rate applies to a transaction. In almost every case, it is based on where the customer is — not where you are. A seller in Alberta invoicing a client in Ontario charges Ontario’s 13% HST. A Quebec web designer doing all their work in Montreal for a BC client charges BC’s 5% GST — because BC is where the client is.
The specific rule that applies depends on what you’re selling. Physical goods, services, and digital products all have different place-of-supply tests — but they all point to the same conclusion: look at the recipient’s location, not your own. The legal basis is CRA Technical Bulletin B-103, which sets out inter-provincial place-of-supply rules in detail.
The three rules
Physical goods, services, and digital products
Physical goods — where the goods are delivered
The simplest rule: for tangible goods sold by way of sale, the place of supply is the province where the goods are delivered to the recipient. It doesn’t matter where you ship from, where the goods were made, or where your business is registered.
Source: Section 1 of Part II of Schedule IX of the Excise Tax Act.
Examples
ON seller ships furniture to a BC address → 5% GST + 7% BC PST (12% total)
BC seller ships electronics to an ON address → 13% HST
AB seller ships goods to an AB address → 5% GST only
Services — the recipient’s address you have on file
For most services, the place of supply is the recipient’s address obtained by the supplier in the ordinary course of business — typically the billing or business address on your invoice or contract. This is the primary rule under Section 13 of Division 3 of Part 1 of the Regulations.
If you have multiple addresses for the client (e.g., billing in Ontario, registered office in Quebec), use the address most closely connected to the supply — generally where they contracted with you from.
The fallback — where you perform the service — only applies if you genuinely haveno address for the recipient on file. For any standard B2B engagement where you have a contract or invoice, you will have an address.
CRA example from B-103
A QC web designer does all their work in Quebec. Client’s billing address is in Ontario. Place of supply = Ontario. Designer charges 13% HST — not 14.975% QC rate. Where the work is performed is irrelevant when you have the client’s address.
More examples
BC consultant, client address in NS → 14% HST (Nova Scotia rate)
ON marketer, client address in AB → 5% GST only
MB designer, client address in QC → 5% GST + 9.975% QST (if registered for QST)
Exceptions for specific service types
The general address rule applies to most freelance and consulting services. Specific override rules exist for: personal services performed in person, services to tangible property (e.g., repairs), services to real property, location-specific events, litigation services, and computer-related services with specific physical locations. If your service falls into one of these categories, the rules differ.
Digital products & intangibles — recipient’s address, with a fallback
For intangible personal property — software licences, SaaS subscriptions, downloads, digital content, and other products that can be used anywhere — the place of supply follows the recipient’s address you have on file, same as services. Source: Sections 6, 7, 8 of Division 2 of Part 1 of the Regulations.
The critical difference from services: if you have no address on file for a digital product customer, the fallback is the highest applicable rate among the provinces where the product can be used — not the performance location. For an unrestricted SaaS product available across Canada, this means you must charge the highest rate in the country until you obtain an address.
Examples from B-103
Software sold to QC customer (address on file, no use restriction) → 5% GST (QC rate). QST applies separately under QC rules.
Same software sold to ON customer (address on file) → 13% HST
Software sold with no customer address — can be used anywhere in Canada → charge highest rate in Canada (currently 15% HST — NB, NL, or PE)
Quick reference
| Supply type | Primary rule | Fallback (if no address) | Legal source |
|---|---|---|---|
| Physical goods | Province where goods are delivered | N/A — delivery address is always known | Sched. IX, Part II, s.1 |
| Services (general) | Recipient's address obtained in ordinary course | Where service is primarily performed | Regs, Div. 3, Part 1, s.13 |
| Digital products / SaaS | Recipient's address obtained by supplier | Highest rate among provinces where product can be used | Regs, Div. 2, Part 1, s.6–8 |
Free tool
Calculate your exact rate
Use our free Canadian sales tax calculator to get the answer for your specific situation — seller province, buyer province, and product type — with government sources cited.
Use the free calculatorThe same $1,000 transaction — five different outcomes by destination province
| Customer province | Tax applied | Tax amount | Customer total |
|---|---|---|---|
| Ontario (ON) | 13% HST | $130.00 | $1,130.00 |
| British Columbia (BC) | 5% GST + 7% PST | $120.00 | $1,120.00 |
| Quebec (QC) | 5% GST + 9.975% QST | $149.75 | $1,149.75 |
| Alberta (AB) | 5% GST only | $50.00 | $1,050.00 |
| Nova Scotia (NS) | 14% HST | $140.00 | $1,140.00 |
All from the same seller, same product. Only the customer’s province changes. PST/QST requires separate provincial registration.
What most people get wrong
Common place-of-supply mistakes
Using your own province's rate for all customers
The most common mistake, and also the most expensive. If you're in Ontario and charge 13% HST to every customer regardless of where they are, you're overcharging Alberta customers (should be 5%) and potentially undercharging Quebec customers who also owe QST. Place of supply almost never points to the seller's province — it points to the buyer's.
Believing "where I do the work" determines the rate for services
This is a pervasive misconception. A developer in Nova Scotia who invoices a client in Alberta charges 5% GST — not 14% HST. The work is done in NS, but the place of supply is Alberta because that's the recipient's address on the invoice. The CRA's B-103 bulletin explicitly uses a Quebec designer/Ontario client example to make this clear: the designer charges Ontario HST, not Quebec rates.
Not collecting the address and defaulting to the wrong fallback
For digital products, the fallback when you have no address is the highest rate in Canada — not your own province's rate, and not zero. For services, the fallback is where you perform the service — which may also not be the rate you'd assume. The clean solution is to always collect and record a business or billing address for every customer. It takes a field on your invoice and eliminates the ambiguity.
Thinking place of supply only matters for GST/HST
Place of supply determines which province's GST/HST rate applies — but it also triggers provincial tax obligations. If your goods are delivered to BC, BC PST applies on top of GST. If your services go to a Quebec address, QST may apply. Place of supply is the first question; then you check whether that province has its own additional tax and whether you're registered to collect it.
Applying the rule wrong when a client has offices in multiple provinces
If a client has a billing address in Ontario and a head office in Quebec, which address governs? B-103 says to use the address most closely connected with the supply — typically the address on the contract or the address where the person who hired you is located. When in doubt, ask the client which address they want on the invoice. Their answer determines the rate.
Summary
Key takeaways
Place of supply determines which province's tax rate applies — it almost always points to the customer's location, not yours.
Physical goods: tax rate is based on the delivery province. Simplest rule.
Services: tax rate is based on the recipient's address you have on file. The fallback (where you perform the service) only applies if you genuinely have no address.
Digital products / SaaS: tax rate is based on recipient's address. If no address: charge the highest rate applicable among provinces where the product can be used.
The legal reference for all inter-provincial rules is CRA Technical Bulletin B-103. The practical guide is on canada.ca/en/revenue-agency.
Place of supply determines the GST/HST rate. It also triggers provincial tax (PST, QST) — which requires separate registrations beyond your CRA number.
Always record a billing or business address for every customer. It eliminates fallback-rate ambiguity and is required to support your filings.
When a client has multiple addresses, use the one most closely connected to the transaction — usually where the contracting party is based.
Free tool
Calculate your exact rate
Use our free Canadian sales tax calculator to get the answer for your specific situation — seller province, buyer province, and product type — with government sources cited.
Use the free calculatorGovernment sources
Sources
The place-of-supply rules in this article are sourced directly from CRA publications. B-103 is the primary legal reference for inter-provincial transactions — note that some rate examples in the bulletin are outdated (BC no longer has HST), but the place-of-supply determination rules remain current and authoritative.
- Place of supply — practical guide for businesses
Canada Revenue Agency
- Memorandum 3-3 — place of supply (supply made in or outside Canada)
Canada Revenue Agency
- GST/HST — which rate to charge
Canada Revenue Agency
- GST/HST for businesses — overview
Canada Revenue Agency
Keep reading
Related guides
Freelancer Selling Services Across Provinces: Which Tax Rate to Charge?
The place-of-supply rule applied specifically to freelancers and consultants — with real province examples and common mistakes.
Selling Digital Products in Canada: A Complete Tax Guide
How the place-of-supply rules work for downloads, SaaS, licences, and online courses — including the "highest rate" fallback when you have no address.
Shipping and Delivery Charges: When Is Tax Applied in Canada?
Shipping follows the goods — but the rules differ by province. Here's when delivery charges are taxable and when they're not.
Disclaimer
TaxMapCA provides tax information, not tax advice. This article is for general informational purposes only and does not constitute legal or accounting advice. Place-of-supply rules have exceptions for specific supply types not covered here — always verify your specific situation against the CRA sources linked above. TaxMapCA is not affiliated with or endorsed by the Canada Revenue Agency, Revenu Québec, or any provincial tax authority. For complex situations, consult a qualified CPA or tax professional.