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INSIGHT: New Changes Broaden Collection Requirements for Canada’s Provincial Sales Tax Regimes

Sept. 21, 2020, 7:00 AM

In 2019, two Canadian provinces—Québec and Saskatchewan—expanded their sales tax registration requirements in certain cases to cause nonresidents who did not carry on business or have any nexus with the province to have to register for, and collect sales tax. Since that time:

  • Saskatchewan has further expanded its nonresident registration requirements and has done so with retroactive effect;
  • Québec has stated that it is considering ways to force nonresidents to charge tax on supplies of corporeal property; and
  • British Columbia (BC) has also announced similar requirements to force nonresidents who sell software or corporeal property in the province to have to register, but has since postponed them indefinitely.

Given the likely need for increased government revenues due to the Covid-19 crisis, it is likely that such expanded registration requirements will be increasingly popular with other governments and could potentially be proposed for the federal goods and services tax (GST)/harmonized sales tax (HST) in the future.


As discussed in our previous article, Saskatchewan recently revised its rules such that, in certain cases, suppliers with no physical connection to Saskatchewan must register for the province’s provincial sales tax (Saskatchewan PST). Further, some of these nonresidents may only be facilitating supplies into the province and may not actually be making any supplies themselves.

In June 2020, Saskatchewan introduced An Act to Amend The Provincial Sales Tax Act (Bill 211), which further expands registration requirements with effect retroactive to January 1, 2020. Bill 211 received Royal Assent on July 3, 2020.

Under Bill 211, “marketplace facilitators” and operators of “online accommodation platforms” will be required to register for Saskatchewan PST in certain circumstances, even if they do not carry on business in Saskatchewan and even if they did not make any supplies themselves. Bill 211 also makes “electronic distribution services” delivered through an “electronic distribution platform” taxable, with the effect that operators of electronic distribution platforms will also now have to register. There is no minimum sales threshold below which registration is unnecessary.

To be a marketplace facilitator, a person must make or facilitate a marketplace for retail sales by “marketplace sellers” and must collect and remit payment from consumers to marketplace sellers. However, there is no requirement that a person actually receive any consideration in exchange for providing its services as a marketplace facilitator. An online accommodation platform is defined as “an electronic marketplace that enables or facilitates transactions in relation to accommodation services located in Saskatchewan.”

Finally, an “electronic distribution platform” is defined as “a website, internet portal, gateway, application or other means prescribed in the regulations that allow a consumer or user to purchase at a retail sale, whether singly, by subscription or in any other manner, including maintenance, updates and support, tangible personal property or services that are delivered through an electronic format.”

Bill 211 relieves “marketplace sellers” and sellers on online accommodation platforms from the requirement to have to register for Saskatchewan PST if the marketplace facilitator or operator of the online accommodation platform is registered—but only if the seller sells exclusively through the marketplace facilitator or online accommodation platform. It is thus possible for situations to arise in which both the platform and the seller are required to be registered, and it is unclear how collection and remittance are meant to work in such a situation.

For example, if a retailer with a physical store in Saskatchewan makes some of its sales through the store and some sales through a marketplace facilitator, the legislation does not address whether it is the retailer or the marketplace facilitator that must collect and remit the tax on sales made through the marketplace facilitator. At the time of writing of this article, Saskatchewan’s Ministry of Finance has not provided any meaningful commentary on who they believe should be remitting, and who they will consider potentially liable if amounts are not remitted in these circumstances.

The “marketplace facilitator,” “online accommodation platform” and “electronic distribution platform” concepts have the potential to significantly expand the reach of Saskatchewan PST to nonresidents of Saskatchewan who do not carry on business in Saskatchewan.


As discussed in our previous article, Québec recently began requiring certain nonresident suppliers to register for and collect Québec Sales Tax (QST), including nonresidents of Québec making taxable supplies of services or incorporeal movable property to Québec consumers; certain operators of “digital platforms”; and persons located in Canada but with no connection to Québec who make certain supplies of goods into Québec.

In its 2020–21 Budget, the Québec government noted that it had participated in a pilot project with the federal government to improve collection of QST on “corporeal property from abroad.” While the pilot project had not had the desired results, the Québec government reiterated that it was determined to see QST collected on corporeal property from abroad and stated that it would work with the federal government to implement a harmonized solution in 2021.

Given that Canadian suppliers of corporeal movable property have been required to register since September 1, 2019, these comments likely mean that Québec is considering ways to expand its registration requirements to supplies of corporeal property from suppliers who are not resident in Canada.

British Columbia

In its 2020 Budget and Fiscal Plan, BC became the third province to announce expanded registration requirements for its provincial sales tax (BC PST). Under the new requirements, persons not resident in BC (whether or not resident in Canada) would be required to register in certain circumstances if they provided “software for use on or with an electronic device ordinarily situated in British Columbia or … a telecommunication service.” Further, the new registration requirements would require persons located in Canada but not in BC to register in certain circumstances if they caused tangible personal property to be delivered in BC.

The draft legislation included a CA$10,000 (US$7,500) threshold, below which persons would not be required to register. This threshold is relatively low, especially when compared to the CA$30,000 threshold that applies for GST/HST and QST and thresholds in other jurisdictions.

BC’s new registration requirements were originally meant to take effect on July 1, 2020. However, due to the Covid-19 pandemic, the BC government later announced that the expanded registration requirements would be postponed until further notice, and as of the date of writing, they have not yet taken effect.

Questions Raised by the Expanding Registration Requirements

The expansion of sales tax registration requirements to nonresidents not carrying on business in particular provinces or even in Canada raises questions about the constitutionality of such legislation. We are aware of at least one case in which a taxpayer in one province is challenging the authority of another province to require extra-provincial sales tax registration. We also note that even if such requirements are constitutionally valid, it remains uncertain whether they will be enforceable in other provinces or outside Canada.

Such concerns are heightened in the context of Saskatchewan’s Bill 211, which retroactively applies registration requirements to nonresidents not carrying on business in Saskatchewan to more than five months before the changes were proposed, and encompasses nonresidents who are not actually making any supplies themselves into the province and would not have had to charge tax under the prior regime.

Where legislation is of questionable constitutional validity and is being applied extraterritorially, it is generally a good idea for the government to rely on voluntary registrations. If a nonresident voluntarily complies with the legislation, registers and charges tax going forward, the province will have received the additional taxes it is looking for and will not have to face lengthy court battles.

However, where a province like Saskatchewan seeks to apply its legislation retroactively, and is effectively imposing the tax directly on the nonresident vendor or platform (as they will likely not be able to collect the tax from customers) it might limit the effectiveness of the legislation as it is unclear how willing nonresidents will be to co-operate by registering and collecting Saskatchewan PST if by doing so they may create a retroactive liability.

Planning Points

Companies should be aware that the new rules may apply to them, even if they are not carrying on business in a particular province. Further, while the BC changes have been postponed, companies making supplies to persons in BC should be aware that the new rules will likely apply in the future. Given the rapid pace of change in this area, it is advisable for companies looking to do business in Québec, Saskatchewan or BC to seek professional advice to ensure that they understand the requirements.

Finally, the legislative enthusiasm for these changes in various provinces—together with the significant funding needs that will likely arise in the wake of the Covid-19 crisis—suggest that similar changes may also be forthcoming for the federal GST/HST. Companies should be prepared for the possibility that such changes may arise in the future, possibly as early as the next federal budget.

Alan Kenigsberg is a Partner, Roger Smith is an Associate and Alain Fournier is a Partner at Osler, Hoskin & Harcourt LLP, Canada.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.