The same cart costs different amounts in different provinces
Sales tax on an online order follows the buyer, not the seller. The spread runs from 5% to 15% — on a $500 order that is a $50 difference, and plenty of checkouts get it wrong.
An identical basket, from an identical seller, costs a different amount depending on which province it is being shipped to. This surprises people, and it catches out a startling number of checkouts.
Destination, not origin
For goods shipped within Canada, the tax that applies is the tax of the province the goods are delivered to. A retailer in Toronto shipping to Calgary charges Alberta's rate, not Ontario's.
The current rates FirstBy bills against:
| Province / territory | Rate |
|---|---|
| Alberta, NWT, Nunavut, Yukon | 5% |
| Saskatchewan | 11% |
| British Columbia, Manitoba | 12% |
| Ontario | 13% |
| Nova Scotia | 14% |
| New Brunswick, Newfoundland and Labrador, PEI | 15% |
| Quebec | 14.975% |
On a $500 order the difference between Alberta and Newfoundland is $50. That is not a rounding error; it is larger than most of the price gaps people switch sellers over.
The failure mode
The common bug is a checkout that hardcodes one province — usually Ontario, because that is where the developer is — and applies 13% to everyone. An Alberta buyer is then overcharged eight percentage points, and a Newfoundland buyer undercharged two.
Overcharging is the worse half. You are collecting money as tax that you will not remit as tax, from customers who have no way to detect it.
We are not above this. An earlier version of this checkout did exactly that, and it is now tested per province rather than assumed.
What honest tax handling looks like
- Ask for the delivery province before quoting a total, not after payment details.
- Show the rate and the name. "HST (Ontario 13%)" tells someone the number is real. "Tax: $65.00" does not.
- Recalculate when the address changes. A quote from before the address was entered is a guess.
- Do not fold tax into the headline price. Tax is the one charge the Competition Act's drip-pricing provision explicitly exempts, because it is imposed by legislation rather than by the seller. It is legitimate to add it at checkout — provided you add it correctly.
That last point is worth holding onto. Tax is allowed to appear late. Shipping is not.