Pricing, Cost Drivers and 2026 Rules
GST/HST and QST on ERP SaaS: foreign vendors, ITCs and Quebec
How GST/HST, QST and provincial sales tax apply to ERP subscriptions in Canada, the 2021 rules for non-resident digital vendors, ITC invoices and Quebec specifics.
An ERP subscription is generally a taxable supply in Canada, so you should expect GST/HST, and in Quebec the QST, on the invoice, plus provincial sales tax in some provinces. For a GST/HST-registered business, the federal tax is usually recoverable as an input tax credit (ITC) when the vendor is properly registered and the invoice contains the required information. The trap is foreign vendors: since 1 July 2021, many non-resident digital vendors are registered under a simplified GST/HST framework that is designed for sales to consumers. If you do not give such a vendor your GST/HST registration number, it may charge you tax that, according to the CRA, generally cannot be claimed as an ITC or a rebate.
This guide is general information as of October 2026, not tax advice. Check the Canada Revenue Agency and Revenu Québec and ask your accountant about your situation. It is part of the ERP pricing overview.
The taxes that can appear on an ERP invoice
| Tax | Where it applies | Administered by | Recoverable by a registered business? |
|---|---|---|---|
| GST | Provinces and territories without HST | CRA (Revenu Québec in Quebec) | Generally yes, as an ITC |
| HST | Participating provinces (for example Ontario and the Atlantic provinces) | CRA | Generally yes, as an ITC |
| QST | Quebec | Revenu Québec | Generally yes, as an input tax refund (ITR) |
| Provincial sales tax (PST/RST) | British Columbia, Saskatchewan and Manitoba have their own retail sales taxes, which can apply to software and some digital services | Each province | Generally not recoverable; it is a cost |
HST rates differ by province and have changed in recent years (for example, Nova Scotia lowered its HST rate from 15% to 14% on 1 April 2025), so look up the current rate on the CRA's GST/HST rates page rather than relying on an old invoice. In Quebec, the QST rate is 9.975%, charged in addition to the 5% GST.
Which province's rate applies to a subscription supplied to a business depends on the place-of-supply rules for intangible personal property and services, which generally look at where the customer is located. If you have offices in several provinces, ask the vendor which address it uses and how it determines the rate.
Non-resident vendors and the simplified framework (since 2021)
Before July 2021, many foreign software vendors were not registered for GST/HST at all. Since 1 July 2021, non-resident vendors of digital products and services, and digital platform operators, whose taxable supplies to Canadian consumers exceed a threshold must register and collect GST/HST, many of them under a simplified registration framework. Simplified-framework registrants collect tax but cannot claim ITCs themselves, and their registration does not support ITC claims by their customers in the usual way.
What this means for a Canadian business buying an ERP or other SaaS from abroad:
- Check how the vendor is registered. A vendor registered under the normal GST/HST regime issues invoices showing its registration number, and you claim ITCs as usual. A vendor registered only under the simplified framework is a different case.
- Give your registration number. The CRA advises registered buyers to provide proof of their GST/HST registration to simplified-framework suppliers so that tax is not charged. If tax is charged anyway, the CRA says it may be difficult to recover, because it generally cannot be claimed as an ITC or rebate; you would need to ask the vendor for a refund. The CRA's GST/HST Notice 322 explains the recovery rules.
- Self-assessment. If an unregistered non-resident supplies you a service or intangible property, the Excise Tax Act may require you to self-assess tax on an "imported taxable supply", but generally not where the supply is acquired for use exclusively in your commercial activities. Businesses that make exempt supplies, for example some financial services or health-care providers, may need to self-assess. Ask your accountant.
Quebec: the QST and specified registration
Quebec has had its own regime for out-of-province and foreign suppliers of digital services since 2019 (1 January 2019 for suppliers outside Canada, 1 September 2019 for suppliers elsewhere in Canada). Suppliers registered under Quebec's specified registration system collect QST on sales to Quebec consumers. As with the federal simplified framework, a QST-registered business should give the vendor its QST registration number so the vendor treats the sale as a business sale. Note that Revenu Québec generally administers the GST/HST for businesses located in Quebec, so a Quebec business usually deals with Revenu Québec for both taxes.
What a valid invoice needs for an ITC
The information you need to support an ITC depends on the amount of the purchase. For purchases of $100 or more, the invoice must show, among other things, the supplier's name and GST/HST registration number; larger purchases (of $500 or more) also require your business name, the terms of payment and a description of the supply. Check the CRA's input tax credit pages for the full list, and ask vendors that bill through an online portal to include these details. Your ERP should store the vendor's registration number on the supplier record so it is ready for audits.
Worked example (illustrative)
An Ontario business with a GST/HST registration buys a subscription priced at $30,000 a year from a vendor registered under the normal regime. At Ontario's HST rate of 13%, the invoice shows $3,900 HST, which the business claims as an ITC on its return: the net cost is $30,000.
A second vendor, registered only under the simplified framework, charges $3,900 because the business never provided its registration number. That $3,900 is generally not claimable as an ITC. Over a five-year term, that is $19,500 of avoidable tax unless the vendor refunds it. A British Columbia business in the same position might also owe BC PST on software; PST is not recoverable and is a real cost in the comparison.
Checklist for your accounts payable team
- Record each SaaS vendor's GST/HST (and QST) registration number and regime.
- Provide your registration numbers to every foreign SaaS vendor at onboarding.
- Check the first invoice for the right province's rate.
- Flag invoices that charge tax without a registration number.
- Ask your accountant whether any purchase requires self-assessment.
- Include PST in the cost comparison if you are in BC, Saskatchewan or Manitoba.
FAQ
Does the vendor's country matter?
What matters is its registration status in Canada and Quebec, and the regime it is registered under, not only where it is located.
Can I claim ITCs on implementation services?
Generally yes, if the partner is registered, charges GST/HST correctly and you use the service in your commercial activities.
Is software subject to provincial sales tax?
In BC, Saskatchewan and Manitoba, provincial sales tax rules can apply to software and some digital services. BC's definition of software has included software as a service since 2024, and Manitoba's retail sales tax has applied to cloud computing services, including SaaS, since 1 January 2026 (Bulletin RST 033). Check each province's ministry of finance guidance for the current rules.
What if a vendor refuses to remove the tax?
Ask in writing, citing your registration number. If it still charges simplified-framework tax, consult your accountant about recovery options under Notice 322.
Sources
- Canada Revenue Agency — GST/HST rates, input tax credits, digital economy rules and Notice 322
- Revenu Québec — QST, specified registration and administration of GST/HST in Quebec
- Justice Laws Website — the Excise Tax Act
- Government of British Columbia — PST on software
