Whoever is named as importer of record on the customs declaration owns the tax obligation and the right to recover tax on business inputs. When the customer is importer by default, because the brand shipped delivered at place with no tax arrangement, the carrier collects GST or HST plus a brokerage fee on delivery. The surprise is rarely the tax itself. It is the fee and the delay, neither of which appeared at checkout.
A brand acting as importer needs a Canadian business number and a GST and HST account, obtained through non resident registration. There is no entity requirement, but there is a security and filing requirement, and returns must be filed even in quiet periods. Treat it as a standing compliance cost of the Canadian market, priced into the margin before launch, not discovered after the first filing deadline.
The federal GST is 5 percent. In HST provinces the combined rate replaces the separate provincial sales tax on most goods: the rate the customer pays depends on the province of delivery, not the province of entry. A parcel cleared in one province for delivery in another is taxed on the destination basis, and checkout systems that tax on the warehouse or port location will get it wrong quietly and at scale.
Quebec runs its own QST with its own registration, and British Columbia and Manitoba run provincial taxes with separate rules for out of province sellers. The practical answer for a small brand is a tax engine or a broker who maintains the rate table. Hand maintained spreadsheets of Canadian rates go stale, and stale rates are how a brand under collects for a quarter and then argues with an assessment.
If tax is collected at checkout, say so in the delivery promise: taxes included, no charges on delivery. If it is not, say that too, with the same prominence, before payment. The refused parcel problem is a wording problem first. Customers refuse because the delivery demand contradicts what the checkout led them to expect, and carriers charge the return journey to the brand either way.
Keep the tax line itemised on the invoice the customer sees. Canadian buyers are used to seeing GST and HST broken out, and an all in price with no breakdown draws support tickets and, from business buyers, requests for a compliant invoice they can claim input credits against. The breakdown costs nothing to show and ends that whole category of query.
A return does not automatically reverse the Canadian tax. The brand needs a documented route: credit the customer including the tax, adjust it in the filing period, and keep the customs proof that the goods left Canada or were reimported correctly. Refunding the product price while silently keeping the tax is the kind of small discrepancy that survives for months and then surfaces in a review as a pattern.
Confirm the current registration thresholds, filing frequency, and security requirements with a licensed customs broker or Canadian tax adviser before registering. Rates and provincial participation change by budget, and a Canadian filing obligation, once created, has to be maintained even if the brand later pauses the market.
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No. Non resident businesses can register for a business number and a GST and HST account without forming a Canadian entity. Registration brings filing obligations and possibly a security requirement, which should be confirmed before applying.
Because the shipment was sent with the customer as importer of record and no tax collected at checkout. The carrier cleared the parcel, paid the tax, and collected it plus a brokerage fee on delivery. Collecting tax at checkout under your own registration prevents it.
No. HST follows the place of supply, generally the delivery province. A checkout that taxes on the entry province will misprice most interprovincial deliveries, which is why a maintained rate table or tax engine matters.
The brand credits the customer, documents the return movement, and adjusts the tax in its filing. The adjustment needs evidence, so return labels, carrier records, and credit notes should be kept together with the original entry documents.