How to Report GST/QST on E-Commerce Sales (Online Business Guide)

Introduction

Selling online can expand your business across Canada — and even globally — but it also introduces complex GST (Goods and Services Tax) and QST (Quebec Sales Tax) obligations. Whether you sell through Shopify, Amazon, Etsy, or your own website, you must charge, collect, and remit sales taxes correctly based on the customer’s location.

This comprehensive guide from Mackisen CPA Montreal explains how to report GST/QST on e-commerce sales, when you must register, how marketplace rules work, and how to stay compliant with Revenu Québec and the CRA as an online seller.

Legal and Regulatory Framework

E-commerce taxation is governed by:

• Excise Tax Act (R.S.C. 1985, c. E-15) — federal GST/HST.

• Quebec Sales Tax Act (R.S.Q., c. T-0.1) — provincial QST.

• Specified QST System (SQST) — for non-resident or out-of-province sellers who supply digital products or services to Quebec consumers.

Learning Insight

E-commerce sales are not tax-free just because they occur online. The key question is “Where is the customer located?” — not where the seller operates. Taxes apply based on the destination of the sale, not the origin.

Step-by-Step: How to Report GST/QST on E-Commerce Sales

Step 1 — Determine Your Registration Obligations

You must register for GST and QST if:

• Your total worldwide taxable revenues exceed $30,000 in any 12-month period; or

• You are a non-resident selling digital products/services to Quebec consumers and exceed $30,000 in sales to Quebec.

Quebec-based sellers: register under the regular QST system.
Out-of-province or foreign sellers: register under the Specified QST System (SQST).

Example

• A Quebec Shopify seller with $45,000 in total Canadian sales must register for both GST and QST.

• A U.S. software company selling $40,000 annually to Quebec consumers must register for QST under the SQST system.

Step 2 — Understand When to Charge GST and QST

You must apply the correct tax rate based on where your buyer resides or where the product/service is delivered.

Step 3 — Set Up Your Online Platform for Tax Collection

Most e-commerce platforms (Shopify, Amazon, Etsy, WooCommerce) have built-in tax modules. Configure your tax settings to:

• Enable GST (5%) and QST (9.975%) for Quebec addresses.

• Apply HST for provinces with harmonized tax rates.

• Exclude taxes for international (export) sales.

For Shopify:

1. Go to Settings → Taxes → Canada.

2. Enter your GST and QST registration numbers.

3. Ensure “Charge taxes on digital products” is checked if applicable.

Learning Insight

Even if platforms like Amazon or Etsy collect taxes on your behalf, you are still responsible for reporting those amounts on your GST/QST returns unless the marketplace is registered as the “deemed supplier.”

Step 4 — Record and Report Taxes Collected

Your accounting software should separately track:

• GST Collected (5%)

• QST Collected (9.975%)

• ITCs (Input Tax Credits) and ITRs (Input Tax Refunds) for business expenses

When filing:

1. Add total taxable sales (including e-commerce).

2. Report GST/QST collected.

3. Deduct eligible ITCs/ITRs.

4. Submit via Mon dossier pour les entreprises or CRA’s My Business Account.

Keep digital records of all sales, invoices, and tax summaries for six years.

Step 5 — File and Remit Taxes Online

Quebec sellers: File combined GST/QST through Mon dossier pour les entreprises.
Out-of-province/foreign sellers: File QST separately under the Specified QST System at revenuquebec.

Pay through:

• Online banking (Revenu Québec – TVQ).

• Pre-authorized debit via Mon dossier.

• CRA’s “My Payment” for GST/HST.

Learning Insight

Even if your platform collects and remits QST automatically (like Amazon Canada), you must verify and retain proof of remittance for your audit file.

Marketplace Rules and “Deemed Supplier” Model

Under Revenu Québec’s 2019 e-commerce reforms:

• Marketplaces like Amazon, Etsy, and eBay may be considered “deemed suppliers.”

• They collect and remit QST directly on behalf of sellers using their platforms.

• Sellers using these marketplaces may not need to collect QST themselves on those transactions.

However: direct website or social media sales still require you to collect and remit QST manually.

Learning Insight

Always verify whether your marketplace is a deemed supplier. You remain responsible for compliance if QST is not properly remitted.

Common Errors to Avoid

• Assuming e-commerce sales are tax-exempt.

• Charging GST/QST based on your own province instead of the buyer’s.

• Forgetting to register once sales exceed $30,000.

• Not tracking taxes collected by marketplaces.

• Mixing personal and business transactions in payment gateways.

Learning Insight

Revenu Québec and CRA now use payment processor data (Stripe, PayPal, Shopify Payments) to cross-match unreported online revenues. Keep your reports reconciled monthly.

Real Quebec Business Example

A Montreal clothing store expanded to Shopify and quickly passed $30,000 in sales. They failed to register for QST and were later assessed $4,200 in unpaid taxes plus penalties.

A second retailer integrated QST and GST settings early, automated filings via QuickBooks, and maintained perfect compliance — even during an audit.

Lesson: Set up correctly from the start to avoid retroactive assessments.

Compliance Checklist

Do

• Register for GST/QST once sales approach $30,000.

• Enable tax collection for each province in your e-commerce settings.

• Record all GST/QST collected and remitted.

• Save digital tax reports from your platform monthly.

• File and remit through Mon dossier or CRA portals.

Don’t

• Assume marketplaces handle everything.

• Mix business and personal payment accounts.

• Skip QST registration for digital products.

• File without verifying tax amounts collected by your platform.

Mackisen Strategy

At Mackisen CPA Montreal, we help online businesses stay fully compliant by:

1. Setting up correct tax collection systems on Shopify, Amazon, and WooCommerce.

2. Registering for GST/QST or the Specified QST System.

3. Automating monthly reporting and reconciliations.

4. Preparing full audit-proof records for Revenu Québec and CRA.

Our CPA team ensures that every online sale, refund, and remittance is compliant and optimized for cash flow.

Why Mackisen

With over 35 years of combined CPA experience, Mackisen CPA Montreal helps e-commerce businesses navigate complex GST/QST laws. From registration to automation, we keep your online business compliant, efficient, and audit-ready.