Intro: the problem Shopify founders run into
A common setup: you run a Canadian corporation, your Shopify store is based in Canada, but your inventory ships from a U.S. warehouse. Then the complaints start:
“My customers get charged tax at delivery by FedEx. So I don’t charge GST/HST on Shopify.”
This usually creates two issues:
- Customer frustration (surprise COD charges: “duties/taxes + brokerage”).
- CRA risk if you should have charged GST/HST on the sale but didn’t. CRA’s general position is simple: if you’re required to charge GST/HST and you don’t, you can still be liable for the tax.
This post explains what’s actually happening and how to fix it cleanly.
Two different “taxes” people confuse
GST/HST on the sale (CRA)
GST/HST is a tax on a taxable supply made in Canada. For goods (tangible personal property), whether the supply is made in or outside Canada depends largely on where the goods are delivered or made available to the customer under the Excise Tax Act place-of-supply rules.
In plain English: if your sale is structured so the goods are delivered to the customer in Canada, that usually points to GST/HST applying to the sale.
Import GST and duties (CBSA)
Separately, when goods enter Canada, CBSA can assess duties and GST on import. Couriers commonly collect these amounts at delivery. CBSA states imported goods may be subject to GST and/or duty, and courier/mail import processes can require duty and taxes payable on import.
So yes – your customer can get charged at the door. But that charge is tied to importation, not automatically tied to whether you should have charged GST/HST on the sale.
The key question: who is the importer of record?
The importer of record is, broadly, the person/entity shown on CBSA accounting documents and tied to responsibility for duties/taxes on the import. CBSA guidance describes importer-of-record liability and how the importer of record is identified on CBSA accounting documents.
CRA’s GST guidance also uses the concept: for imported goods, the importer of record is the person who presents the accounting document and is responsible for payment of GST on those imported goods.
What usually happens under DAP (Delivered At Place)
Under DAP, the seller delivers to the destination, but the buyer typically handles import formalities (and pays import duties/taxes). That’s why your customer gets hit at the door. (This is an Incoterms concept; ICC explains DAP/DDP differences at a high level.)
Why “FedEx charges tax” does not automatically mean you can skip GST/HST
Here’s the compliance gap:
- CBSA import charges can be collected from the recipient at delivery (common under DAP).
- CRA can still expect GST/HST on the sale if your supply is considered made in Canada (for example, because goods are delivered to a Canadian address under your sales terms).
And if you’re required to charge GST/HST but didn’t, CRA’s own registrant guidance says you’re still liable for that tax.
“Inclusive of tax” risk
If you don’t charge GST/HST separately at checkout, CRA can still assess you. CRA has published guidance on when assessments may be raised on a tax-included basis depending on the facts and how pricing/tax was disclosed.
“I didn’t charge it” is not a defense. In some cases, CRA may treat your selling price as having included GST/HST and assess you anyway.
The fix for most Shopify stores: collect GST/HST at checkout and ship DDP
For most direct-to-consumer Shopify stores shipping to Canadian customers, the cleanest customer experience is:
- Charge GST/HST at checkout (correct rate by province)
- Ship DDP (Delivered Duty Paid) so duties/import taxes are billed to you, not the customer
What DDP changes
Under DDP, the seller takes responsibility for import clearance and paying import duties/taxes, so the buyer doesn’t get a surprise bill at the door.
Which GST/HST rate do you charge?
You charge based on the customer’s Canadian delivery province (place-of-supply within Canada). CRA’s “Which rate to charge” summary shows: 5% GST in non-participating provinces/territories, 13% HST in Ontario, 14% HST in Nova Scotia (on/after April 1, 2025), and 15% HST in the other participating provinces.
How the seller recovers import GST (ITCs)
If your corporation is a GST/HST registrant and the import GST relates to your commercial activity, you may be able to recover that import GST as an input tax credit (ITC)—but only if the import documentation supports it.
CRA’s policy guidance on ITCs for imported goods discusses ITC entitlement and the need for import documentation (including situations where the “de facto importer” needs documentation from the importer of record).
CRA also has detailed documentary requirements for claiming ITCs and record retention expectations.
Practical takeaway: if you want the ITC, you need the shipment structured so your business is the importer of record (or you can obtain the required import documentation).
What to ask your courier or broker (DDP implementation)
When you talk to FedEx/UPS/DHL or your customs broker, ask for these outcomes in writing:
- Shipments set up as DDP (duties/taxes billed to shipper, not recipient)
- Your business shown appropriately on customs accounting documentation (importer-of-record alignment)
- A reliable process to provide you with the import documents you’ll rely on for ITCs
DDP vs DAP: quick comparison table
| Topic | DAP (Delivered At Place) | DDP (Delivered Duty Paid) |
|---|---|---|
| Who usually pays duties/import taxes? | Customer (often collected by courier at delivery) Door charges common | Seller (billed to shipper) Customer pays once |
| Customer experience | Surprise COD/brokerage is common | Cleaner checkout; fewer complaints |
| Importer of record alignment | Often ends up as customer (or courier acting for customer) | More likely to be seller (better for ITC support, if documented) |
| Risk of “double pay” (checkout + door) | High if you also charge GST/HST at checkout | Low when set up correctly |
Alternative setup: keep DAP and don’t charge GST/HST at checkout
Some sellers choose DAP + “taxes at delivery” because it seems operationally simple.
Why it’s usually not worth it:
- You’re making the customer experience worse (surprise charges).
- It can create GST/HST exposure if CRA expects GST/HST on the sale and you didn’t charge it. CRA’s own registrant guidance is clear that failing to charge doesn’t eliminate liability.
- If you ever try to “price it in,” CRA can assess on a tax-included basis depending on facts and disclosure.
When might DAP + no checkout tax make sense?
Rare cases, typically where your facts strongly support the sale being made outside Canada under the place-of-supply rules (this is very fact-specific), or where you’re intentionally choosing a higher compliance risk in exchange for a specific business model. If you’re doing meaningful volume into Canada, you usually want this reviewed.
Practical checklist for Canadian corporations fulfilling from the U.S.
1) Shopify tax settings
- Confirm you’re charging the correct GST/HST rate based on the customer’s delivery province. CRA’s rate summary is the simplest reference.
- Make sure your checkout and invoices clearly show tax (don’t leave it ambiguous).
2) Shipping terms (Incoterms)
- Decide: DDP (recommended for most DTC) vs DAP
- If DDP: confirm your courier/broker bills duties/taxes to you (shipper).
3) Customs paperwork basics
- Ensure import entries and courier/broker paperwork match your intended importer-of-record outcome. CRA describes importer of record in the import GST context.
- Keep documentation that supports ITCs (CRA documentary requirements).
4) Customer messaging
- If DDP: say “No duties/taxes at delivery” (if true operationally).
- If DAP: clearly disclose “duties/taxes may be due on delivery.”
Common mistakes (what creates “double charging”)
- Charging GST/HST at checkout but shipping DAP
Result: customer pays GST/HST at checkout and gets assessed import charges at delivery. - Assuming CBSA import GST replaces GST/HST on the sale
These are different systems (CBSA importation vs CRA supply). - Not tracking import documents
Even if paying import taxes is “worth it” for customer experience, you’ll want the paperwork if you plan to claim ITCs (and you must retain records). - Ambiguous “tax included” pricing
If you don’t disclose clearly, you increase the odds of a messy CRA assessment discussion. CRA’s published view shows assessments can be tax-included or tax-extra depending on facts and disclosure.
Quick table: GST/HST on sale vs import GST/duties
| GST/HST on the sale | Import GST/duties | |
|---|---|---|
| Controlled by | CRA (GST/HST on taxable supplies made in Canada) | CBSA (charges when goods enter Canada) |
| Trigger | Where goods are delivered/made available under place-of-supply rules | Importation into Canada; courier often collects at delivery |
| Who pays | Customer pays seller at checkout (seller remits) | Importer of record pays (could be customer or seller) |
| Common confusion | “FedEx charged tax” doesn’t automatically mean GST/HST on the sale was handled. | |
When to get advice (worth it before you scale)
Get this reviewed if you have any of the following:
- Inventory in multiple locations (U.S. + Canada)
- Marketplace sales (platform rules can change who collects)
- Meaningful B2B volume (documentation expectations rise)
- High volume into specific provinces (rate and place-of-supply discipline matters)
FAQs
Do I charge GST/HST if my inventory is in the U.S.?
Often, yes – if the sale is structured so goods are delivered/made available to the customer in Canada, the place-of-supply rules can point to a supply made in Canada.
Why does FedEx/UPS charge GST at delivery in Canada?
That’s typically import GST/duties collected on behalf of CBSA when goods enter Canada, especially when the customer is effectively the importer of record under DAP-style shipping.
What is DDP vs DAP for Canada shipments?
DDP generally means the seller handles import clearance and pays duties/taxes; DAP generally leaves import formalities to the buyer.
What does “importer of record” mean?
It’s the entity identified on CBSA accounting documents and tied to liability for duties/taxes on the import (and it matters for import-GST paperwork).
Can CRA assess GST/HST if I did not charge it?
CRA guidance for registrants is clear: if you were required to charge GST/HST but didn’t, you can still be liable for the tax.
How do I avoid customers paying tax twice?
The simplest operational fix for most Shopify stores is charge GST/HST at checkout and ship DDP, so the customer doesn’t get import charges at the door.
Final Takeaway
If you ship from a U.S. warehouse to Canadian customers, “FedEx charged tax at delivery” is usually an import issue (CBSA), not proof that your GST/HST on the sale (CRA) was handled correctly. The cleanest setup for most Shopify stores is to charge GST/HST at checkout (using the right provincial rate) and ship DDP so customers pay once and you keep the paperwork needed to support ITCs.
If you require specialist E-Commerce Accounting services, our team at Think Accounting works with hundreds of brands who sell on multiple platforms across multiple jurisdictions. Topics like the above are on example of how we bring our expertise to the ongoing discussions with our clients and help them avoid costly mistakes.