GST, HST, PST and QST for a New Canadian Clothing Brand
By The Velocity Wear Team
Canadian sales tax is less fragmented than the American system and more complicated than the British one. There is a federal tax, some provinces harmonise theirs with it, some run a separate provincial tax alongside, Quebec has its own, and one province has no provincial sales tax at all. For a brand shipping nationally, that means the tax on a hoodie depends on the customer's address.
This is orientation. Thresholds and rates change and an accountant is worth the fee — but knowing the structure tells you which questions to ask.
The layers
- GST, the federal goods and services tax, which applies across the country.
- HST, in provinces that have harmonised their provincial tax with the federal one, so a single combined rate is charged and administered federally.
- PST, a separate provincial sales tax administered by the province, in provinces that have not harmonised.
- QST, Quebec's own sales tax, administered by Revenu Québec and with its own registration.
- Alberta, which has no provincial sales tax, so only GST applies there.
The consequence for an online brand is that the total tax on the same garment differs by destination, and your storefront needs to be configured to charge accordingly rather than applying one rate everywhere.
The small supplier position
Below a defined revenue threshold you may qualify as a small supplier and not be required to register for GST/HST. Check the current threshold with the CRA rather than relying on a figure in an article, and note that it is measured on worldwide taxable revenue over a rolling period rather than on a calendar year.
Staying unregistered keeps admin light and keeps your prices simpler. What you give up is input tax credits — the ability to recover GST/HST you pay on your own costs, which for an importing brand includes tax paid at the border.
Why importing changes the calculation
GST is generally collected on commercial imports at the border. If you are registered, that is recoverable through input tax credits. If you are not, it is a straight cost sitting on top of your landed cost, unrecoverable.
For a brand importing meaningful production quantities, that alone often justifies voluntary registration well before the threshold requires it. Run the numbers on your actual order values rather than assuming the simpler option is the cheaper one.
Provincial registrations are separate
Registering for GST/HST does not register you for a province's own PST or for QST. Those are separate regimes with their own registration rules, and whether you need to register in a province where you have no physical presence depends on that province's rules about selling into it.
This is the part where a brand that has grown quietly across the country can find it has obligations it never noticed. Reviewing it once a year is enough; never reviewing it is not.
The cash flow discipline
Sales tax you have collected is not revenue. It sits in your account looking exactly like money you can spend, and spending it on inventory works right up until the filing period.
Keep it separate, at least mentally and ideally in a second account, and plan production purchases against money that is genuinely yours. Ordering in smaller, more frequent runs helps with the same discipline for a different reason — less cash committed at any one moment, and more of the balance actually available.
