US ecommerce brands generally don’t need to register for Canadian GST/HST when shipping from the US — import taxes are typically collected at the border instead. Registration becomes necessary only if you hold inventory in Canada, sell through a Canadian entity, or your sales occurring within Canada exceed $30,000 CAD in a calendar year. This guide breaks down GST, PST, and HST, when each applies, and what US brands actually need to do about them.
Key Canadian Ecommerce Tax Rules for US Brands
- Canada applies a 5% federal GST on most imported goods
- Some provinces charge separate provincial taxes or use HST
- Courier shipments under CAD $40 are generally duty- and tax-free under CUSMA
- DDP shipping can improve customer experience but does not automatically eliminate GST/HST registration exposure
Understanding GST and HST for Canada
Canada’s tax system for goods and services features a multi-layered structure that includes the goods and services tax (GST), provincial sales taxes (PST), and in certain regions, the harmonized sales tax (HST). We’ll explain each of these taxes in more detail and their relevance to e-commerce merchants.
In practice: every shipment into Canada owes at least the 5% GST; whether PST or HST gets layered on top depends entirely on the destination province, not on anything the merchant controls.
Goods and Services Tax (GST)
GST, or goods and services tax, is a federal value-added tax levied on most goods and services. With a standard rate of 5%, Canada GST applies broadly to products purchased by Canadian consumers, including those sold by foreign businesses.
Provincial Sales Tax (PST)
Unlike GST which is federally imposed, PST, or provincial sales tax, is levied by individual Canadian provinces on the sale of goods and services within their jurisdiction. PST rates vary, ranging from 0% to 9.975%, depending on the province. It’s important to understand each province’s specific requirements, as PST is only applied and collected when the recipient lives in a PST province and the shipment clears customs in that same province.
Harmonized Sales Tax (HST)
HST, or harmonized sales tax, combines Canada’s federal goods and services tax with provincial sales taxes. This integration, adopted by certain provinces, simplifies the tax structure by allowing businesses to apply a single HST rate rather than separate charges for GST and PST. Canada HST rates differ across regions, typically falling between 13% and 15%.
Are US E-Commerce Sales Subject to Canada HST/GST?
Not always. Many US ecommerce brands shipping directly from the United States into Canada may not need GST/HST registration solely because import taxes are collected at the border. However, registration obligations can arise depending on inventory location, fulfillment structure, and Canadian business activity.
Transactions between US ecommerce businesses and Canadian consumers are subject to consumption taxes. For non-postal carrier shipments from the US to Canada, the tax de minimis threshold is $40 CAD. This means orders valued over approximately $29 USD are liable for GST, PST, and HST as applicable, based on the destination province.
DDU vs. DDP Shipping for Canada
To manage these taxes, brands can choose between Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP) billing terms for their shipments. Under DDU, the recipient is responsible for paying any import duties and taxes upon delivery. Conversely, with DDP, the seller assumes all responsibilities and expenses associated with shipping. Usually the merchant will handle collection of duties and taxes from consumers during the checkout process and then arrange for their shipping carrier to pay these costs upon customs clearance.
The practical difference: DDP costs more to set up but consistently produces a better delivery experience — we recommend it for exactly that reason. See our full DDP vs. DDU guide for the complete comparison, and our guide on meeting the shipping expectations of Canadian shoppers for what that experience actually needs to look like.
Do You Need to Register for a Canadian Tax ID?
Many direct-to-consumer brands qualify as an “unregistered non-resident” importer, which exempts them from needing a business number or filing separate Canadian tax returns.
Registration is required if:
- You hold inventory in Canada
- Your place of sale is Canada — determined by Canada’s “last sale” rule
- You operate as a Canadian corporation
- Your sales occurring within Canada exceed $30,000 CAD in a calendar year
Under the DDP shipping model, all taxes are collected at the point of sale and settled during the customs clearance process, with no further tax liabilities for the merchant. This system is facilitated by the Canada Border Services Agency (CBSA) and compliant with the Canada Revenue Agency (CRA). Therefore, ecommerce brands shipping personal use goods to Canadian consumers generally don’t need to worry about Canadian tax registrations or filings, as all taxes are accounted for at the border.
The requirement to register for Canada HST/GST, which applies to sales exceeding $30,000 CAD in a calendar year, is specific to sales occurring within Canada. For most US ecommerce brands, sales fulfilled from the US are typically exempt from this threshold.
However, brands with more complex sales and distribution models may still require registration. It’s best to consult with a Canadian tax and trade lawyer before registering for Canada HST/GST.
How Passport Can Help
Passport helps US ecommerce brands navigate Canada’s layered tax system without the manual tracking. Beyond best-in-class cross-border parcel logistics, Passport’s Seller of Record program can monitor your sales against Canada’s $30,000 CAD registration threshold and handle registration, collection, and remittance if you cross it. So you’re not tracking that math yourself as you scale.
Reach out to our team to see how Passport can support your Canadian expansion.
Frequently Asked Questions
What is Canada’s HST?
Canada’s harmonized sales tax (HST) combines the federal GST and provincial sales tax into one rate, applied in participating provinces. It’s 15% in most participating provinces and 13% in Ontario.
What’s the difference between GST, PST, and HST?
GST is a federal 5% tax that applies nationwide. PST is a separate provincial tax, ranging from 0% to 9.975%, that only applies in provinces that charge it. HST replaces GST and PST with a single combined rate in the provinces that use it.
Do US companies have to pay Canada GST/HST?
US companies don’t pay it directly, but non-postal carrier shipments into Canada valued above the $40 CAD de minimis threshold are subject to GST, and PST or HST where applicable, based on the destination province.
Do I need to register for a Canadian tax ID as a US-based brand?
Only in specific cases: if you hold inventory in Canada, your place of sale is Canada, you operate as a Canadian corporation, or your in-Canada sales exceed $30,000 CAD in a calendar year. Most US brands fulfilling orders from the US fall outside this threshold.
What is CUSMA, and how does it affect shipping to Canada?
CUSMA is the Canada-United States-Mexico free trade agreement. Under its low-value shipment provisions, courier shipments under $40 CAD are generally duty- and tax-free.
Can a Seller of Record handle Canada GST/HST registration for me?
Yes. A Seller of Record can register, collect, and remit GST/HST on your behalf once you approach or cross Canada’s $30,000 CAD threshold, without you needing to set up a Canadian business entity.
Is DDP or DDU better for shipping to Canada?
DDP generally produces a better customer experience, since taxes are calculated and collected at checkout rather than billed to the customer at delivery. DDU requires less setup but shifts the risk of a surprise fee onto the customer.
Authored by Thomas Taggart
Head of Global Trade | Passport
Thomas Taggart is a cross-border commerce leader with more than 20 years of experience in international shipping and regulatory affairs. As the Head of Global Trade, Thomas helps ecommerce brands go global by simplifying international trade, tax, and product compliance issues. Prior to Passport, he brought international shipping solutions to market through multiple roles in UPS’s product development organization.
