How is GST/HST charged on digital products and online courses?

Why the buyer's location decides the tax, not the seller's

For a physical product, GST/HST place-of-supply rules generally look at where the good is delivered. For a digital product, an e-book, a template, software, or a pre-recorded course, there is no shipping address. So the rules instead look at the customer's location, determined from information collected at checkout such as billing address, IP address, or the payment method's country. A course sold to an Ontario resident is taxed at 13% HST. The same course sold to someone in Alberta is taxed at 5% GST, because the applicable rate follows the customer's province. This is covered further in which province's sales tax to charge customers in other provinces.

A sale to a customer whose information indicates they are outside Canada is generally treated as an export of a service or intangible property, and is zero-rated. No GST/HST is charged, but a registered seller can still claim input tax credits on the costs of producing and selling that product. This is the same underlying export principle that applies to AdSense and platform royalty income described in how YouTube and AdSense income is taxed in Canada. It applies here to a seller's own direct-to-customer digital sales instead of a platform payment.

Why an online course usually is not tax-exempt

GST/HST has a long-standing exemption for tuition from schools, universities, and other recognized educational institutions delivering qualifying courses. That exemption is built around accredited, structured educational programs, not a course an individual creator sells directly through their own website or a platform like Teachable or Kajabi. A creator selling a course on marketing, fitness, or a creative skill is a commercial seller of intangible property, not an educational institution. The exemption generally does not extend to that sale, even if the content is genuinely instructional.

This distinction surprises some course creators who assume anything described as an educational course is automatically exempt. The exemption depends on the seller's status as a recognized institution and the course meeting specific criteria, not simply on the subject matter being educational in nature.

The 2021 rules that put platform sales on the same footing

Since July 2021, Canada's digital economy measures have applied to certain non-resident digital platforms. These platforms generally must register for and collect GST/HST themselves when selling to Canadian consumers, even when the underlying creator or seller is not registered. This matters for a Canadian creator selling a course or digital product through a large non-resident platform. Some of the tax collection responsibility on sales to Canadian buyers may sit with the platform rather than the creator. That depends on how the platform is structured and whether it qualifies as the deemed supplier. Where you sell directly through your own website rather than a qualifying platform, your own registration and collection obligations apply in the ordinary way described above.

Platform rules vary and are applied differently depending on the specific service. It is worth confirming directly with your platform of choice, such as Teachable, Kajabi, Gumroad, or Podia. Ask how it handles GST/HST collection on your behalf, versus what it expects you to handle yourself.

Registration and input tax credits for a digital seller

The same $30,000 small supplier threshold applies to digital product and course sellers as to any other business. Once your total worldwide taxable revenue passes that amount over four consecutive quarters, registration becomes mandatory. Many digital sellers with low overhead find it worthwhile to register earlier. Input tax credits on software subscriptions, hosting, and marketing costs used to build and sell the product can offset a meaningful share of those expenses once registered.

Keep a clear record of where each digital sale went. Your GST/HST return needs to separate taxable domestic sales by province from zero-rated export sales. Getting that split wrong either overcharges Canadian customers incorrectly or understates the tax actually owed on domestic sales.

What this looks like for a course bundled with live coaching

A course sold as a pure self-serve digital product follows the rules above cleanly. Where a creator bundles a pre-recorded course with live coaching calls or ongoing support, the bundle is generally still treated as a single taxable supply for GST/HST purposes. It is taxed according to the customer's location the same way, rather than being split into a taxable piece and a separately assessed piece. That is unless the components are priced and sold entirely separately.

What happens when a customer's location is not clear

Checkout systems do not always collect a full billing address for a digital sale. Sometimes they rely only on an email address and a payment method. Where the available information is genuinely ambiguous about whether a buyer is in Canada, most sellers default to charging GST/HST at the seller's own provincial rate. That is safer than assuming zero-rating applies. Claiming an export sale without reasonable evidence of the customer's location is the riskier assumption on review. Collecting at least a billing country at checkout, even for a purely digital product, is a simple way to remove most of that ambiguity going forward.

The same evidence question applies to refunds. A refunded digital sale should reverse the GST/HST originally charged along with the revenue. The reversal should match the tax treatment of the original sale, taxable or zero-rated. It should not default to one or the other regardless of how the original transaction was recorded.

How we handle digital product and course sellers

We set up GST/HST collection to follow customer location correctly from the first sale. We also confirm what a seller's chosen platform handles automatically under the digital economy rules, versus what still needs to be tracked directly. And we make sure the return correctly separates domestic taxable sales from zero-rated exports. Our digital products and course creator accounting page covers the full setup we use for this kind of seller.