Expanding your market to Canada – Do you need to register for GST?
June 19, 2026
What is the Goods and Services Tax (GST)?
GST in Canada is a Value-Added Tax (VAT) that is applicable to most goods and services at every stage in the supply chain but ultimately borne by the end consumer.
Businesses that are registered for GST can claim GST paid on expenses and purchases of goods as Input Tax Credits (ITCs). One common example of an expense that could be claimed as an ITC is the GST charged upon importation of goods.
GST is applicable on most goods and services at 5%. Some goods and services may be “zero-rated” or “exempt” (tax not applicable). Many provinces have their own provincial sales tax rates – British Columbia, Saskatchewan, Manitoba, and Quebec administer their provincial sales tax separately from the federal government. Other provinces, such as Ontario, New Brunswick, Nova Scotia Prince Edward Island, and Newfoundland, have harmonized their provincial sales tax administration with the federal government, and the federal government (Canada Revenue Agency, or CRA) collect the provincial portion of the sales tax on behalf of these provinces. Harmonized sales tax rates are 13-15% and vary by province.
Alberta and the territories (Yukon, NWT, and Nunavut) do not have a provincial sales tax.
Are you carrying on a business in Canada?
Whether a business is “carrying on business in Canada” for GST purposes is a question of fact. A business may be considered to be carrying on business in Canada even though the entity may not have a permanent establishment in Canada.
No single factor is determinative. The following factors are considered when determining whether a business is being carried on in Canada:
- Location of employees
- Location of assets or inventory
- Place from which transactions are solicited
- Place where contracts are concluded
- Location of a bank account
- Location where the service is performed
- Place of manufacture or production
A business being carried on in Canada, based on the factors above, would likely need to register for GST.
Voluntary registration
A business that is not required to register for GST may do so voluntarily. While there is a compliance burden associated with being a GST registrant (GST returns must be filed on a monthly/quarterly/annual basis, depending on volume of taxable sales), many businesses find that there is a benefit to registering because of the mechanism to claim GST paid on expenses/importation in the form of ITCs.
If you have any questions about GST in Canada, including the requirements and process to register for GST, please do not hesitate to contact us.
