Quick answer: When you sell a digital product to a Canadian buyer, the sales tax rate is set by the customer's province of residence, not yours. That means one prompt pack sold from your laptop in Whitby can carry six different tax outcomes depending on where the buyer lives. Stripe, Gumroad and Whop do not always collect the right Canadian sales tax for you, and if they under-collect, the shortfall is yours to remit. Quebec has its own separate registration nobody talks about. If you sell to Canadians from outside Canada, there is a simplified GST/HST regime you may already be required to join. And Canada's short-lived Digital Services Tax was rescinded in 2025, so ignore anyone still quoting it.
This guide unpacks the sales tax rules on digital products in Canada for 2026, flags the traps for custom GPTs, prompt packs and AI courses, and gives you a decision tree you can run for any $47 sale.
Key takeaways
- Digital products sold to Canadian consumers follow the place-of-supply rules for intangible personal property. The sales tax rate is set by the buyer's province.
- HST provinces charge one blended tax: 13% (Ontario), 14% (Nova Scotia, since 1 April 2025) or 15% (New Brunswick, Newfoundland and Labrador, Prince Edward Island).
- GST-only provinces and territories (Alberta, Yukon, Northwest Territories, Nunavut) charge 5% GST only. Saskatchewan and Manitoba add a provincial layer on top of GST.
- British Columbia charges 5% GST plus 7% PST on most software and digital products in Canada.
- Quebec has a separate QST registration for non-Quebec sellers. The threshold is $30,000 CAD in sales to Quebec consumers over 12 months.
- The federal GST/HST small-supplier threshold is $30,000 in worldwide taxable revenue over four consecutive calendar quarters. Once you cross it, you must register with the Canada Revenue Agency.
- Non-resident creators selling digital services to Canadians may be caught by the simplified GST/HST regime introduced 1 July 2021. Same $30,000 threshold.
Why the digital sales tax rules feel confusing in Canada
Custom GPTs, prompt packs, AI courses, downloadable checklists and Notion templates are all intangible personal property in the eyes of the Canada Revenue Agency. That is the same category as software licences and ebooks, and it puts them squarely inside Canada's goods and services tax (GST) and, in HST provinces, the harmonized sales tax (HST). The Canadian tax rules that apply to them were written years before the OpenAI GPT Store or Whop existed, but they still govern the sale for every Canadian business selling online.
The core principle: the CRA uses the recipient's ordinary place of residence to decide the sales tax rate. If your buyer lives in Halifax, that digital product sale is a 14% HST sale. If your buyer lives in Calgary, it is a 5% GST sale. Your address does not matter. Your platform's address does not matter. The buyer's billing address does. Selling physical goods online as well? See our ecommerce accountant page.
This is where the confusion piles up. Creators assume one national rate. There isn't one. They assume Stripe or Gumroad handles it. Stripe and Gumroad handle part of it. They assume Quebec is the same as the rest of Canada. It isn't.
Province-by-province sales tax rates for digital products (2026)
Rates below assume the buyer is a Canadian consumer and the seller is a GST/HST registrant. If you are not yet registered, see the small-supplier section further down.
| Province or territory | Total tax on a digital sale | Federal component | Provincial component | How it is remitted |
|---|---|---|---|---|
| Alberta | 5% | 5% GST | None | To the CRA |
| British Columbia | 12% | 5% GST | 7% PST | GST to the CRA, PST to the BC government |
| Manitoba | 12% | 5% GST | 7% RST | GST to the CRA, RST to Manitoba Finance |
| New Brunswick | 15% | Bundled | Bundled | Full 15% HST to the CRA |
| Newfoundland and Labrador | 15% | Bundled | Bundled | Full 15% HST to the CRA |
| Northwest Territories | 5% | 5% GST | None | To the CRA |
| Nova Scotia | 14% | Bundled | Bundled | Full 14% HST to the CRA |
| Nunavut | 5% | 5% GST | None | To the CRA |
| Ontario | 13% | Bundled | Bundled | Full 13% HST to the CRA |
| Prince Edward Island | 15% | Bundled | Bundled | Full 15% HST to the CRA |
| Quebec | 14.975% | 5% GST | 9.975% QST | GST to the CRA, QST to Revenu Quebec |
| Saskatchewan | 11% | 5% GST | 6% PST | GST to the CRA, PST to the Saskatchewan Ministry of Finance |
| Yukon | 5% | 5% GST | None | To the CRA |
A quick read on the provincial columns for digital products in Canada:
- BC PST on digital products. BC has charged 7% PST on software and digital products since the province rewrote its software bulletin in April 2021. Most downloadable software, SaaS access, e-learning courses and template packs fall inside this scope, and a custom GPT subscription almost always does too.
- Saskatchewan PST on digital services. The 6% PST has applied to a wide set of digital services and software since 2019 and there was no rate change in 2025 or 2026.
- Manitoba RST on streaming services and software. Manitoba added RST to streaming services and online audio and video services in December 2021 and continues to treat software as taxable at 7%. Digital courses can be caught depending on how the RST bulletins classify the content, so this is the one to verify with a specific fact pattern.
- Quebec QST. The Quebec sales tax rate is 9.975%. Quebec runs its own registration system for non-Quebec sellers of digital services (more below).
The three traps for Canadian sales tax on digital goods
Trap 1: Your platform is not your tax authority
Stripe, Gumroad, Whop, Podia and the OpenAI GPT Store all handle payments, but their tax behaviour is not uniform. Some collect GST/HST when you tell them you are registered. Fewer collect BC PST, Saskatchewan PST or Manitoba RST. Almost none collect QST on your behalf as a Canadian seller of digital products.
The gap belongs to you. If the platform under-collects, the CRA and the provincial tax authorities still see you as the supplier of record. That means the shortfall comes out of your margin at audit, plus interest and penalties. Read your platform's tax settings the same week you launch, not the week you get a Notice of Assessment.
Trap 2: The Quebec QST registration nobody knows about
If you are a Canadian seller located outside Quebec and you sell taxable digital services to Quebec consumers, you can be pulled into Quebec's specified QST system once your sales to Quebec residents exceed $30,000 CAD over any 12-month period. This is separate from your CRA GST/HST registration. You register with Revenu Quebec, you file separately, and you remit 9.975% Quebec sales tax on your Quebec sales.
Most creators discover this only when a Quebec buyer asks for a QST number on an invoice. By then you may already be over the threshold.
Trap 3: The non-resident digital services rules
If you are based outside Canada and sell digital products to Canadian consumers, the CRA introduced a simplified GST/HST registration regime on 1 July 2021. The threshold is $30,000 CAD in taxable supplies to specified Canadian recipients over any 12-month period. Once you cross it, you must register, charge GST/HST at the applicable provincial rate on sales to Canadian consumers, and remit to the CRA.
This is worth flagging because a lot of Canadian creators partner with US-based collaborators, use US LLCs, or joint-venture with foreign course sellers. Those foreign entities have their own registration obligations under the rules for digital sales in Canada, and platform fees do not remove them.
A note on the federal Digital Services Tax
You will still see 2024-vintage articles telling Canadian creators to worry about the federal Digital Services Tax. Do not. The Digital Services Tax Act received royal assent on 20 June 2024 and came into force on 28 June 2024, but the federal government announced on 29 June 2025 that Canada would rescind the tax to advance trade negotiations, and it is being repealed retroactively to the day it came into force. Any DST paid is being refunded with interest. The tax was in any case aimed at very large foreign digital platforms with more than 750 million euros of global revenue, not at Canadian prompt-pack sellers. It never applied to you. It still doesn't. Ignore anyone quoting it.
Decision tree: one $47 prompt pack, one digital product sale
Use this walkthrough on any digital sale before you press publish on the checkout page.
Step 1. Are you a small supplier for federal GST/HST purposes?
Add up your worldwide taxable revenue over the last four consecutive calendar quarters. Include every prompt pack, custom GPT subscription, course, coaching call and consulting invoice, not just Canadian sales. If the total is $30,000 or less, you are a small supplier and you are not required to charge GST/HST. If it is above $30,000, you must register with the CRA and start charging.
Step 2. Where does your buyer live?
The digital sales tax rate follows the buyer's usual place of residence. For a consumer, your best evidence is the billing address they enter at checkout, backed by the payment method's country and the IP address. Keep this data with each order. You need it if the CRA ever asks how you decided which rate to charge.
Step 3. Apply the rate from the table above.
A $47 prompt pack sold to a buyer in Oshawa carries $6.11 of HST. The same pack sold to a buyer in Vancouver carries $2.35 of GST plus $3.29 of BC PST. The same pack sold to a buyer in Calgary carries $2.35 of GST and nothing else.
Step 4. Check the provincial layer.
If the buyer lives in BC, Saskatchewan, Manitoba or Quebec, you need to work through whether you are also required to register with that province. Each province has its own threshold and rules. Quebec's specified QST system starts at $30,000 in Quebec sales for non-Quebec sellers.
Step 5. Confirm your platform settings.
Log into Stripe, Gumroad or whichever tool takes the money. Confirm what taxes it is actually collecting on your Canadian digital product sales. If it is only collecting GST/HST, you are on the hook for the provincial layer in BC, Saskatchewan, Manitoba and Quebec.
Step 6. Remit.
GST and HST go to the CRA on your GST/HST return. Provincial layers go to each province on their own schedule. If you are registered, you can also claim input tax credits on the GST/HST you pay on business inputs (that Cursor subscription, that Framer plan) and net each input tax credit against what you owe. That is a real cash advantage of registering that most Canadian business owners under the threshold overlook.
What to keep in your records
You want three things on file for every digital sale in Canada:
- The buyer's billing address, payment country and IP address at time of purchase.
- The tax you charged, broken out by tax type (GST, HST, BC PST, MB RST, SK PST, QST).
- The invoice or receipt the buyer received, showing the tax lines.
If you sell through a platform that stores this for you, download the export monthly and back it up. Platforms come and go. Your CRA reassessment period does not.
FAQ on sales tax for digital services in Canada
Is there GST on digital products in Canada?
Yes. If you are a GST/HST registrant, you charge GST/HST on digital products sold to Canadian consumers at the applicable provincial rate. A prompt pack sold to Ontario is 13% HST. A digital course sold to Alberta is 5% GST. If you are still under the $30,000 small-supplier threshold and not registered, you do not charge, but you also cannot claim input tax credits on your business inputs.
Will Canada have a Digital Services Tax in 2026?
No. The federal Digital Services Tax was rescinded on 29 June 2025 and is being repealed retroactively to 20 June 2024. Any amounts paid are being refunded. The tax was aimed at very large foreign digital platforms and never applied to Canadian creators anyway. Provincial sales taxes on digital products (BC PST, Manitoba RST, Saskatchewan PST, Quebec QST) are unrelated to the DST and continue to apply.
Did Canada cancel the Digital Services Tax?
Yes. The Department of Finance announced on 29 June 2025 that Canada was rescinding the DST to advance broader trade negotiations with the United States. Legislation to repeal the Digital Services Tax Act retroactively to 20 June 2024 has been introduced, and paid amounts are being refunded with interest.
What items are exempt from sales tax in Canada?
For the CRA, most basic groceries, prescription drugs, most health, medical and dental services, and residential rent are exempt or zero-rated from GST/HST. Digital products for consumers, including prompt packs, custom GPTs, AI courses and Notion templates, are not exempt. They are taxable supplies.
Do I have to charge GST/HST on a free prompt pack given away in exchange for an email address?
No. There is no consideration. GST/HST applies to taxable supplies made for consideration. A giveaway is not a taxable supply.
My customer says they are a business. Do I still charge GST/HST?
Yes. The place-of-supply rules for intangibles look at the recipient's location, not their status. A B2B buyer in Ontario still pays 13% HST on the invoice. They can claim input tax credits on their own return if they are registered.
I only sell through the OpenAI GPT Store. Do the same rules apply?
Yes, subject to the OpenAI GPT Store's payout mechanics. You are still the supplier of record for tax purposes unless a written agreement clearly transfers that role to the platform. Do not assume the platform is collecting on your behalf without confirming it in writing.
What if I sell mostly to Americans and only a handful to Canadians?
The $30,000 federal small-supplier threshold looks at your worldwide taxable revenue, not just Canadian sales. Once you cross $30,000 total, GST/HST registration is required and you charge Canadian buyers at the applicable provincial rate.
Does the BC PST apply to a subscription to a custom GPT?
Most likely yes. BC's software bulletin treats software, software licences and related digital services as taxable at 7%. If the subscription gives the buyer access to a piece of software or a digital platform, expect it to be caught.
What about custom coaching calls I run alongside my prompt pack?
Coaching services follow the place-of-supply rules for services, which look at the recipient's address for consumers. In practice, a coaching call bundled with a digital product is often taxed at the same provincial rate as the product. Bundled pricing needs a specific review.
When do I need to register with Revenu Quebec?
Once your sales to Quebec consumers cross $30,000 CAD over any 12-month period, if you are a Canadian seller outside Quebec.
Where to get help
Sales tax on digital products in Canada is one of those areas where the guidance was written for one economy and the sales are happening in another. The rules still apply. Getting them right in year one is far cheaper than getting them fixed in year three.
If you are a Canadian creator selling custom GPTs, prompt packs, AI courses, downloadable templates or paid Notion databases, EK CPA Pro can walk you through your registration obligations, review your platform settings, and set up a clean tax workflow before your first CRA filing. Book a call through our contact page, or read more about our tax and advisory work.
This article is for general information only and does not replace professional tax advice. Tax rules change, and your specific situation matters. Always confirm with a qualified CPA before making tax decisions.
