GST/QST Rules for Online Businesses in Quebec: Digital Sales, E-Commerce Platforms, and Canada–U.S. Customers

Introduction

Online businesses in Quebec face unique GST/QST challenges. Whether you sell through Shopify, Amazon, Etsy, social media, or your own website, sales tax rules apply differently depending on the customer’s location, the type of product, platform settings, and whether digital services are involved.
Many entrepreneurs unknowingly charge incorrect rates, fail to remit platform-collected tax, or misclassify cross-border sales — leading to reassessments and penalties.
This guide explains how GST/QST applies to online sales, digital products, foreign customers, and marketplace facilitators, and how to stay fully compliant.

Legal and Regulatory Framework

Online and digital businesses must follow the Excise Tax Act (GST) and Quebec Taxation Act (QSTA), including:

• Charging GST/QST on sales to Canadian customers unless zero-rated.

• Not charging GST/QST on exports to non-residents (with proof of out-of-Canada status).

• Collecting and remitting GST/QST on digital services supplied in Canada.

• Reporting marketplace facilitator taxes when Amazon, Etsy, or Shopify Marketplace collects on your behalf.

• Maintaining complete sales records, including platform statements.

Revenu Québec enforces:

• ETA supply place rules

• Marketplace facilitator provisions (effective July 2021)

• Digital services rules for non-resident platforms

• Accurate reporting of taxable vs zero-rated supplies

Key Court Decisions

Courts have confirmed that:

• Online businesses are considered to have made supplies “where the customer is located,” not where the seller is.

• Zero-rating for exports applies only when the seller can prove the customer is outside Canada.

• Digital services fall under taxable supplies unless explicitly zero-rated.

• Platform data is valid audit evidence, and inconsistent reporting may lead to adjustments.

These decisions reinforce the need for accurate customer-location documentation and platform reconciliation.

Why CRA and Revenu Québec Target These Issues

Authorities frequently audit e-commerce businesses because:

• Online sellers often rely solely on Shopify or Amazon settings without verifying accuracy.

• Many businesses assume that online sales are exempt from sales tax.

• Platform payouts often differ from reported revenues due to fees, refunds, and tax withholdings.

• U.S. and international sales are mistakenly treated as zero-rated without proper proof.

• High refund rates and digital-product sales create recurring discrepancies.

Industries at highest risk: supplements, beauty products, consulting, online coaching, subscriptions, physical product sellers, and digital service providers.

Mackisen Strategy

We help online sellers maintain GST/QST compliance and avoid costly audits.

1. Platform-by-Platform Tax Review

We assess your tax settings and obligations for:

• Shopify

• Amazon Canada

• Etsy

• WooCommerce

• Squarespace

• Facebook & Instagram Shops

• TikTok Shop

2. Marketplace Facilitator Reconciliation

We verify:

• Taxes collected by platforms

• Taxes remitted by platforms

• Taxes you must remit yourself

• Sales categories not covered by facilitator rules

3. Export & Non-Resident Customer Compliance

We implement documentation systems:

• Proof that a customer is outside Canada

• Payment processor statements

• Shipping confirmations

• Client IP evidence for digital services

4. Digital Product Rules

We determine GST/QST rules for:

• E-books

• Courses

• Subscription services

• Digital downloads

• Software-as-a-service (SaaS)

5. Audit-Proof Reporting

We prepare accurate reports based on:

• Platform monthly statements

• Gateway reports (Stripe, PayPal, Shop Pay)

• Inventory and fulfillment logs

If an audit occurs, we respond directly to CRA or Revenu Québec.

Real Client Experience

A Quebec entrepreneur selling wellness products through Shopify believed all U.S. sales were automatically zero-rated. During an audit, Revenu Québec disallowed over $9,000 in unproven export sales due to missing documentation.
Mackisen reconstructed sales logs, shipping records, and platform evidence — recovering 80% of the denied zero-rated sales.
This case proves that even legitimate exports must be backed by documentation.

Common Questions

1. Do I charge GST/QST to U.S. customers?
No, but only if you can prove the customer is a non-resident.

2. Does Amazon handle GST/QST for me?
For most retail sales, yes — but not for all categories. You may still have remittance obligations.

3. Are digital products taxable?
Yes, unless they qualify for zero-rating or specific exemptions.

4. What if my platform collected GST/QST but I didn’t report it?
You must reconcile and report according to marketplace facilitator rules. Failure to do so may lead to reassessments.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency, and protection from audit risk.

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GST/QST rules for online businesses in Quebec: Learn how sales tax applies to Shopify, Amazon, Etsy, and digital products. Mackisen CPA Montreal explains cross-border sales, marketplace facilitators, and audit-proof compliance.