Review your Canada tax liabilities

Tax liability insights use sales from your Shopify store in Canada and into each Canadian province. The Tax liability insights section displays an insight when those sales reach a level where registration can be required. An insight names the region that it applies to: Canada, for federal GST/HST, or an individual province, for that province's sales tax.

An insight is a prompt to check, not a decision that's been made about you. It's the start of a review, not the end of one.

An insight is all of these:

• A calculation based on the sales that ran through your Shopify store.
• A signal that it's worth checking whether you need to register in that region.

An insight isn't any of these:

• A legal order, a penalty, or a notice from a tax authority.
• A determination that you owe tax.
• A deadline set by Shopify.

Only a tax authority can determine whether you're required to register. Your situation might differ from what an insight suggests, because insights don't include sales that you make outside Shopify, and don't account for whether the specific products that you sell are taxable in that region.

Deadlines set by a tax authority still apply, so if you've already passed a threshold, then check that authority's registration deadline promptly.

What to do when you see an insight

1. Check the registration rules for the region named in the insight, in Registration thresholds in Canada. The federal GST/HST threshold counts your sales across Canada. A provincial threshold counts your sales into that province, and British Columbia, Manitoba, and Saskatchewan don't set a general minimum sales threshold at all.
2. Check whether the products that you sell are taxable in that region. Canada and the provinces exempt different products, such as some groceries and agricultural products.
3. Add any sales that you made outside Shopify to your Shopify totals, and compare the total to the threshold.
4. Review what registering commits you to. Refer to Before you register.
5. If you need to register, then register with that region's tax authority, and then set up tax collection in Shopify.

If you check and find that you don't need to register in that region, then you don't need to change anything in Shopify.

If you're not sure at any point, contact the tax authority for that region or a tax professional. Registration links for each Canadian tax authority are listed in Canadian taxes reference.

A threshold period is the amount of time that is considered when tax liability is calculated. In Canada, threshold periods are calculated by determining sales made in a quarter, or a period of three months. The quarters in a year are the following:

• January, February, and March
• April, May, and June
• July, August, and September
• October, November, and December

If your store is based in Canada, then generally you need to register for a GST/HST account if both of the following are true:

• You sell or lease taxable products or services.
• Your revenue from taxable sales in Canada is more than 30,000 CAD over the past four completed consecutive calendar quarters, or more than 30,000 CAD over the current calendar quarter.

If your store is not based in Canada, then generally you need to register for a GST/HST account if both of the following are true:

• You sell taxable products or services to customers in Canada, and fulfill those orders from a warehouse located in Canada.
• Your revenue from taxable sales in Canada is more than 30,000 CAD over the past twelve months.

If either of the preceding cases apply to you, then you might need to collect taxes on your sales, remit those taxes to the appropriate tax authority, and file regular reports with the tax authority. If your sales are lower than the threshold, then you don't need to register for a GST/HST account, and you don't need to collect or remit taxes.

Each tax authority sets its own registration rules, and not every authority sets a minimum sales threshold. The following table summarizes them. A threshold is one condition among several, so check that authority's own rules before you register.

Sales tax registration thresholds and rules for Canadian federal and provincial tax authorities

Tax authority	Registration threshold	Official information
Canada Revenue Agency (GST/HST)	More than $30,000 CAD in taxable sales over the last four consecutive calendar quarters, or more than $30,000 CAD in a single calendar quarter.	When to register for and start charging the GST/HST
British Columbia provincial sales tax (PST)	No general minimum sales threshold, so a potential liability can be identified from your first taxable sale. A $10,000 CAD small-seller threshold can apply if you're a British Columbia resident who doesn't have an established commercial location in the province.	Register to collect PST
Manitoba retail sales tax (RST)	No minimum sales threshold, so a potential liability can be identified from your first taxable sale, if you meet Manitoba's other conditions.	Manitoba Retail Sales Tax
Saskatchewan provincial sales tax (PST)	No minimum sales threshold, so a potential liability can be identified from your first taxable sale, if what you sell is taxable in Saskatchewan.	Apply for a PST number

Quebec sets its own QST registration rules, which depend on where your business is located and what you sell. Refer to Registering for the GST and QST.

Alberta, the Northwest Territories, Nunavut, and Yukon have no provincial sales tax. You collect GST only in those regions.

For the full federal and provincial conditions, including what makes a sale taxable in each region, refer to Canadian taxes reference.

Why you can see an insight after only a few sales

British Columbia, Manitoba, and Saskatchewan don't set a general minimum sales threshold. A potential liability in those provinces can be identified from your first taxable sale, so an insight for one of them can appear when your sales there are small. That's expected, and it's not a sign that anything has gone wrong.

An insight in those provinces means what it means anywhere else: check your obligations. It isn't a determination that you need to register. Each province sets its own conditions for who has to register, exempts different products, and can have a small-seller rule that applies to your business. Confirm with the province before you register.

After your store is open and has started to make sales, your sales and locations are automatically monitored to help you determine whether you have tax liabilities.

Before you review your tax liabilities in Shopify, review the following considerations:

• Tax liability is displayed only for transactions that occur within Shopify. If you make sales outside of Shopify, then they aren't included.
• Tax liability is calculated using net sales, not gross sales. Net sales are sales minus refunds and tax.
• Sales aren't reflected immediately in your tax liabilities and might take a few days to update.

Registration rules differ by region. British Columbia, Manitoba, and Saskatchewan don't set a general minimum sales threshold, which means that a potential tax liability can be identified from your first taxable sale in those provinces. Refer to Registration thresholds in Canada and Why you can see an insight after only a few sales.

Canadian tax liability

As you expand, you might need new registrations to stay compliant. If you use Shopify Tax, then your sales and locations are automatically monitored to help you determine whether you have tax liabilities in Canada or in specific provinces. You'll receive notifications that inform you whether you have outstanding tax liabilities based on the information available in your store.

You can also review this information at any time in your Shopify admin.

Steps:

1. From your Shopify admin, go to Settings > Taxes and duties.

2. Click Canada.

3. In the Tax liability insights section, review your activity for notifications.

A status is displayed next to your registration indicating whether you're below, approaching, or have exceeded a registration threshold. If you're approaching or have exceeded a sales threshold, then consider registering to charge tax in that location. If you're not sure whether you should register, then consult a local tax expert or the relevant tax authority.

Canadian tax liability with Basic Tax

If you use Basic Tax, then you can review your tax liabilities in your Shopify admin by going to Settings > Taxes and duties, and then selecting Canada. Your tax liability is displayed above the regions where you're registered to collect tax. A progress bar is displayed to indicate how close you are to exceeding the threshold for collecting taxes in Canada.

If your sales in Canada indicate a potential tax liability, then the progress bar turns red. After you set up collecting GST/HST, the Canadian tax liability tracker isn't displayed.

Registering isn't only switching on tax collection. It creates ongoing obligations that continue until you cancel the registration, including in periods when you make no sales.

When you register, you take on these obligations:

• Charging the tax on every taxable sale from your registration date onward.
• Filing returns on the schedule that the tax authority assigns you. Most authorities require a return for every period, including periods where you had no sales and collected no tax.
• Remitting what you collect by each filing deadline. Tax that you collect isn't revenue. You're holding it on behalf of the tax authority.
• Keeping records that support what you filed.
• Staying registered until you cancel. If you register for GST/HST voluntarily, then you generally need to stay registered for at least one year.

Registering where you have no obligation takes on those filing duties without a reason to. Registering late, where you did have an obligation, can leave you owing tax that you didn't collect. It's worth a few minutes to check which situation you're in. Registering for GST/HST before you're required to is a separate case, because it lets you claim input tax credits in exchange for the filing obligations.

Check the following before you register:

• Have you met the threshold? Add your non-Shopify sales to your Shopify sales, then compare the total to the threshold in Registration thresholds in Canada.
• Are your products taxable there? Canada and the provinces exempt different products. If everything that you sell into a region is exempt there, then your sales total alone doesn't create a registration requirement.
• Do you meet the other conditions? Some provinces require registration only if you also solicit orders in the province and deliver goods there. Refer to Canadian taxes reference.
• Do you want to register early on purpose? Registering for GST/HST before you're required to lets you claim input tax credits. Refer to Voluntary GST/HST registration in Canada.

If you're still unsure after these checks, contact that region's tax authority or a tax professional before you register.

After you've confirmed that you need to register, use the applicable registration path:

• For a federal liability, register for a GST/HST account with the Canada Revenue Agency.
• For a provincial liability, register with that province. Each provincial registration link is listed in Registering with Canadian tax agencies.

Registration can take a few days. You can add your region in Shopify before your tax number arrives, and enter the number when you receive it.

Steps:

1. From your Shopify admin, go to Settings > Taxes and duties.

2. Click Canada.

3. Click Collect in new region.

4. Select a region in which you are registered.

5. In the Sales tax ID, enter your tax number. If you applied for a tax number but haven't received it yet, then leave this field blank. You can update it when you receive your number.

6. Click Collect sales tax.

You can register for taxes voluntarily, even if you don't meet the registration threshold. Registering for GST/HST before you're required to do so means that you must charge and remit GST/HST, but lets you to claim input tax credits on your business tax returns.

Canadian stores can voluntarily register for GST/HST if they sell or lease taxable products or services.

Non-Canadian stores can voluntarily register for GST/HST if any of the following are true:

• You engage in a commercial activity in Canada.
• You are regularly solicit orders for goods to be exported or delivered to Canada.
• You enter an agreement to supply services to be performed in Canada.
• You enter an agreement to supply intangible personal property (such as intellectual property) that meets any of the following criteria:
  • Is to be used in Canada
  • Relates to real property situated in Canada
  • Relates to goods that are ordinarily situated in Canada
  • Relates to services to be performed in Canada

If you voluntarily register to collect GST/HST, then you must do all of the following:

• Collect and remit GST/HST
• File GST/HST tax returns
• Stay registered for at least one year, unless you stop business activities
• Provide a deposit if you don't have a permanent establishment in Canada

To learn more about voluntary registration for GST/HST, refer to Register voluntarily for a GST/HST account.