{"id":57621,"date":"2026-10-28T13:13:35","date_gmt":"2026-10-28T17:13:35","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=57621"},"modified":"2026-10-28T13:13:41","modified_gmt":"2026-10-28T17:13:41","slug":"managing-sales-tax-risks-requires-a-team-effort-the-role-of-marketing-sales-and-product-teams","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/marketing-advertising-and-product-compliance\/managing-sales-tax-risks-requires-a-team-effort-the-role-of-marketing-sales-and-product-teams\/","title":{"rendered":"Managing sales tax risks requires a team effort: The role of marketing, sales, and product teams"},"content":{"rendered":"\n

For businesses that sell, lease, or license goods, services, digital offerings, or other products across Canada, charging the incorrect amount of federal goods and services tax\/harmonized sales tax (\u201cGST\/HST<\/strong>\u201d) and\/or failing to charge the correct amount of provincial sales tax can lead to costly reassessments.<\/p>\n\n\n\n

The Canada Revenue Agency\u2019s (\u201cCRA\u2019s<\/strong>\u201d) recent update to its GST\/HST rates and place-of-supply rules<\/a> webpage, and various GST\/HST Memorandum series regarding place of supply in a province, is a timely reminder that tax compliance extends beyond the finance department. Saskatchewan also recently released guidance on the provincial sales tax treatment of coupons, discounts, rebates, and promotional packages<\/a>. Businesses need to ensure their pricing, marketing, sales, logistics, accounting, and finance functions are aligned and not working in isolation.<\/p>\n\n\n\n

This article provides a high-level overview of key GST\/HST considerations for marketing and advertising professionals and highlights certain provincial sales tax issues.<\/p>\n\n\n\n

How do you determine how much GST\/HST to charge?<\/h2>\n\n\n\n

The amount of GST\/HST to charge is, broadly speaking, a function of the value of the consideration payable for the supply and the applicable tax rate. The term \u201csupply\u201d means the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift, or disposition.<\/p>\n\n\n\n

Generally speaking, the value of the consideration payable for the supply is the actual purchase price or fee charged, not necessarily the full retail price. Where a discount or promotional rate is offered, sales tax is calculated on that reduced price or fee. Special rules may apply where a transaction involves the use of coupons, rebates, gift certificates, or the redemption of loyalty points.<\/p>\n\n\n\n

The GST\/HST rate to charge with respect to a particular transaction depends on the province in which the \u201csupply\u201d is made and generally ranges from 5% to 15%. Applying the correct GST\/HST rate requires determining the characterization of the supply and where that supply is deemed to be made (the \u201cplace-of-supply<\/strong>\u201d).<\/p>\n\n\n\n

Determining the correct sales tax rate is not always straightforward. The applicable rules will often depend on the characterization of the supply, with different rules applying to goods, services, digital products, and other offerings, as well as to supplies that are subject to specialized regimes, such as transportation services, admissions, telecommunications, and certain personal services. Some supplies may also be \u201czero-rated,\u201d meaning tax is charged at a rate of 0%, or exempt from tax altogether.<\/p>\n\n\n\n

Can a business have provincial sales tax obligations without a physical presence in the province?<\/h2>\n\n\n\n

In addition to the 5% GST, provincial sales taxes may apply in British Columbia, Saskatchewan, Manitoba, and Quebec. Each province has its own legislation. While Quebec\u2019s sales tax rules generally align with the GST\/HST framework, the other provincial regimes differ significantly. Businesses should therefore assess their obligations separately in each jurisdiction, as registration, collection, and related compliance obligations may arise even without a physical presence in the province.<\/p>\n\n\n\n

Similar to GST\/HST, specific rules apply when a purchaser uses a coupon, rebate, gift card, or loyalty points when purchasing products and services. In addition, British Columbia, Saskatchewan, and Manitoba have rules relating to promotional items, samples, and similar marketing initiatives. The Saskatchewan Ministry of Finance recently released Information Bulletin PST-80, Coupons, discounts, rebates, and promotional packages<\/em><\/a>. Similarly, British Columbia published Information Bulletin PST-311, Promotional Materials and Special Offers<\/em><\/a> and Manitoba published Information Bulletin PST-037, Promotional Distributor.<\/em><\/a><\/p>\n\n\n\n

How can marketing, sales, product, and other business teams help manage sales tax risks?<\/h2>\n\n\n\n

Businesses should periodically review their systems, documentation, and processes to ensure they support the appropriate sales tax treatment of their transactions. Best practices include:<\/p>\n\n\n\n