Place of Supply Rules

Definition

The place-of-supply rules determine the province (or non-Canadian location) in which a supply is deemed to be made. This matters because the rate of tax to charge (5% GST only, or the specific HST rate of the participating province) depends entirely on that deemed location, not on where the seller is located. The main rules are in ETA s.142 (supply made in Canada vs. outside Canada) and Schedule IX together with the New Harmonized VAT System Regulations (which province within Canada).

Key rules

• Goods delivered or made available: the supply is made in the province where the goods are delivered or made available to the recipient.
• Real property: supply is made in the province where the property is situated.
• Services, general rule: the supply is made in the province indicated by the recipient's home or business address obtained in the ordinary course, provided it is the address most closely connected with the supply. If no Canadian address is obtained, apply the performance-based rules: whether the Canadian service is performed primarily in participating provinces, then the greatest proportion and tie-breaker rules. There is no generic “address where most work happens” rule.
• Services related to real property: the province where the property is situated.
• Services related to tangible personal property use specific location and performance rules, including whether the goods remain in the same province. Do not apply that physical-location rule to intangible rights.
• Intangible personal property (IP, digital products, rights): a tiered set of rules based on where the rights may be used, recipient address, and negotiation location.
• Telecommunication services: based on the location of the equipment used or the billing address.
• Non-residents (ETA s.143): many supplies by non-residents are deemed made outside Canada subject to statutory exceptions including registration and carrying on business in Canada; special digital-economy registration and collection rules must also be checked.

Example

A BC consulting corporation executes the following contracts in 2026.

Contract A. Consulting to an Ontario tech company
  Recipient business address: Toronto, ON
  Place of supply: Ontario (general services rule)
  Rate: 13% HST

Contract B. Software license usable throughout Canada, not restricted
  to particular provinces, sold to a New Brunswick customer
  Only Canadian home/business address obtained: Moncton, NB
  Place of supply: New Brunswick
  Rate: 15% HST

Contract C. On-site repair of a machine located in Alberta
  Services related to tangible personal property; machine in Alberta
  Place of supply: Alberta
  Rate: 5% GST

Contract D. Commercial rent of a BC warehouse to a Saskatchewan tenant
  Real property rule; warehouse in BC
  Place of supply: British Columbia
  Rate: 5% GST

Despite being a single BC seller, the corporation charges three different rates across these four contracts.

Common mistakes

• Applying the seller's home-province rate to every invoice. For an ordinary consulting supply whose place of supply is Ontario, the rate is 13% HST; special service rules can produce another result.
• Using the recipient's mailing address when the general services rule requires the address "most closely connected" with the supply, which may be a different business location.
• Confusing Canadian HST with US state sales tax. Cross-border supplies use the ETA s.142 and s.143 rules, not provincial sourcing in isolation.
• Treating a digital good like a physical good. Intangibles have their own tiered rule, not the shipped-goods rule.
• Forgetting the special rule for real property: the province where the property is physically located governs, regardless of either party's address.

The current CRA place-of-supply guide distinguishes goods, general services, property-related services and intangible rights. CRA memorandum 3-3-6-1 gives the current special-service rules.

Related concepts

Place of supply interacts with the rate structure of each province. The supply must first be classified as taxable under supply classification. For real-estate specific rules, see GST on real property.