Most Canadian online sellers reach US customers eventually, and the tax position changes in two directions at once.

On the Canadian side, exports of goods to customers outside Canada are generally zero-rated. You charge no GST/HST, but you continue to claim input tax credits on related costs — inventory, packaging, advertising, platform fees. Sellers with a substantial export share are often in a permanent refund position, which is a strong argument for filing monthly rather than annually and getting that money back promptly instead of lending it to the CRA for a year.

On the US side, the question is sales tax nexus. Following the 2018 Wayfair decision, US states may require out-of-state sellers to register and collect sales tax once they exceed a threshold of sales or transactions into that state. Thresholds, rules and marketplace-facilitator treatment differ by state, and there are more than forty separate regimes. The Streamlined Sales Tax Governing Board publishes each state’s thresholds.

For most small Canadian sellers this is manageable: marketplace platforms handle collection for sales made through them in most states, and direct sales through your own storefront only create obligations once you cross a state’s threshold. But it is a real obligation, not a theoretical one, and it is tracked by sales volume you may not be monitoring by state. If US direct sales are becoming material, get the nexus position reviewed rather than assuming Canadian residence protects you.

Separately, US federal income tax is a different question from sales tax, and generally turns on whether you have a permanent establishment there. The Canada–US tax treaty offers meaningful protection, but holding inventory in a US warehouse can complicate the analysis.

Customs, duty and landed cost

Importing inventory brings duty, brokerage fees and GST collected at the border. The GST paid on import is recoverable as an input tax credit provided you have the customs documentation — and that documentation is separate from your supplier’s invoice, which is why import GST is one of the most commonly unclaimed credits among e-commerce sellers.

Duty, by contrast, is not recoverable. It is part of the landed cost of the goods and belongs in inventory valuation. Sellers who expense duty separately understate their cost of goods and overstate their margin, then price accordingly.

Foreign currency adds a final layer. Purchases in US dollars must be recorded in Canadian dollars at an appropriate rate — the Bank of Canada daily rate is the usual reference — and the difference between the rate at purchase and the rate at payment is a foreign exchange gain or loss — a real item that belongs in your books rather than being absorbed silently into cost of goods.