Tax Collection in Canada

What is a Distribution Platform Operator?

In Canada, a Distribution Platform Operator (or equivalent) is typically defined as a business that facilitates the sale of goods or services by third-party sellers through an online platform. This includes managing payments, fulfillment, or listing products on behalf of sellers.

If you use Kickstarter’s Pledge Manager to fulfill tangible or digital rewards to Canadian backers, Kickstarter (via its subsidiary Project Partners, LLC) may be considered a Distribution Platform Operator (or provincial equivalent) for Canadian goods and services tax (GST) purposes.

How does Kickstarter support tax collection in Canada?

Kickstarter’s Pledge Manager uses Avalara to collect the appropriate Canadian sales tax—such as GST/HST, QST, or PST—on qualifying transactions shipping to Canadian backers. Kickstarter collects these taxes from the backers and remits them to the appropriate Canadian tax authorities on your behalf.

Collected amounts will appear in the backer report. A detailed breakdown of the applicable federal and provincial taxes per transaction will be made available within 30 days.

What are creators responsible for?

Creators must provide accurate information about their rewards, including item categorization, description, and market value. This information is essential for correctly determining the applicable Canadian sales tax rates.

Note that some provinces may apply tax to digital goods or services in addition to physical goods. You can find further guidance on how to enter tax details for your items in this article.

Sellers registered for GST/HST or QST agree to enter into the election pursuant to Subsection 177 (1.1) of the Excise Tax Act (Canada) and section 40.0.1 of an Act respecting the Quebec sales tax to jointly elect for Project Partners, LLC to be responsible to collect, report and remit GST/HST and QST on all of the taxable supplies made by you as seller through the Kickstarter Pledge Manager. The election is effective until it is jointly revoked by Kickstarter and you. By continuing to use the Pledge Manager, you agree to these terms.

What are backers responsible for?

Canadian backers will be responsible for paying the applicable GST/HST, PST, or QST on the value of their rewards and the cost of shipping, based on their province or territory of residence. Kickstarter calculates and collects this tax during checkout.

What types of transactions may be subject to goods and services tax?

In Canada, goods and services tax (GST) may apply to both physical and digital goods, as well as shipping, depending on the destination province. Tangible items (e.g., merchandise, printed materials, or artwork) are generally taxable. Digital products and services are also often subject to GST/HST and provincial taxes. Tax rules vary by province.

How will sales tax be managed for my campaign?

Kickstarter’s Pledge Manager will collect and remit applicable Canadian indirect taxes on taxable rewards shipped to Canadian backers. As a creator, you will not need to collect these taxes yourself. However, it is your responsibility to provide complete and accurate information about each item’s value and category. This data will be used to determine the tax to charge each backer.

Will I receive reports on collected taxes?

Yes. Kickstarter will issue reports summarizing the tax collected and remitted on your behalf for Canadian backers. These reports can assist you with your own accounting and tax compliance obligations, including when determining whether you need to register for GST/HST or other provincial tax programs.

Do I need to include collected sales tax in my tax filings?

Goods and services tax collected and remitted by Kickstarter on your behalf is not part of your revenue and should not be included as income. However, you should consult a Canadian tax professional to ensure you are meeting all federal and provincial tax obligations—particularly around income tax and possible registration thresholds for indirect tax purposes.

Disclaimer

This content is for general informational purposes only and does not constitute legal or tax advice. For guidance specific to your situation, please consult a qualified Canadian tax advisor or accountant.