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 such address exists, use the address where the service is most performed.
• Services related to real property: the province where the property is situated.
• Services related to personal property (tangible or intangible): general rule is the province where the property is situated at the relevant time.
• 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 unless the non-resident is registered, carries on business in Canada, or imports the goods.

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 sold to a New Brunswick customer
  Intangible property rule; recipient's usual address: 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 four different rates on these four contracts.

Common mistakes

• Applying the seller's home-province rate to every invoice. A BC seller must charge 13% HST on services into Ontario.
• 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.

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.