Expanding your business from the UK to Canada is a massive milestone. Canada offers a familiar legal framework and a hunger for British brands, making it a prime destination for growth. However, the Canada Revenue Agency (CRA) isn't known for its leniency. If you’re selling across the Atlantic in 2026, staying compliant isn't just about avoiding fines, it’s about protecting your ability to scale.
At Sterlinx Global, we manage the daily compliance grind so you can focus on your product. Whether you are navigating GST/HST or the latest digital services tax updates, here are the 10 critical things UK sellers must know today.
1. The GST/HST Registration Threshold is Mandatory
In Canada, the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) are the equivalents of our UK VAT. Many UK sellers mistakenly believe they don’t need to register until they have a physical presence. This is a myth.
If your worldwide taxable supplies exceed $30,000 CAD in a single calendar quarter or over four consecutive quarters, you are generally required to register. For digital sellers and marketplace participants, the rules have become even tighter in 2026. Registering early ensures you can recover "input tax credits" on your Canadian business expenses, effectively lowering your costs.
2. Capital Gains Inclusion Rates Stay at 50%
There was plenty of buzz about Canada potentially raising the capital gains inclusion rate to two-thirds. As of May 2026, the inclusion rate for corporations and non-residents remains at 50%. This means only half of your capital gain on Canadian assets is subject to tax.
For UK businesses holding Canadian property or assets, this is a sigh of relief. However, reporting these gains correctly on Schedule 3 is essential to avoid overpaying. If you're unsure how this affects your UK-based entity, knowing how Canada tax updates for digital services work is a great place to start.
3. Marketplace Facilitator Rules for Amazon and Shopify
If you sell via Amazon.ca or other major platforms, the platform may be responsible for collecting and remitting GST/HST on your behalf. However, this does not always exempt you from registration or reporting.
Marketplace facilitator laws are designed to capture tax at the point of sale, but you still need to monitor your "small supplier" status. We often see UK sellers fall into the trap of thinking "Amazon handles everything." While they handle the collection, your business still needs to maintain clean books for potential CRA audits.
4. Digital Services Tax (DST) is Expanding
Canada recently implemented a 3% Digital Services Tax on large businesses providing digital services to Canadian users. While this primarily targets tech giants, the threshold is lower than many expect. If your UK group has global revenues exceeding €750 million and Canadian digital services revenue over $20 million, you are in the crosshairs. Even if you aren't at that scale yet, the CRA is increasingly looking at digital footprints to determine tax residency and nexus.
5. Filing Deadlines: Mark April 30 and June 15
Missing a CRA deadline is a fast track to interest charges and penalties. For most non-resident individuals, the tax return deadline is April 30. However, if you are carrying on a business in Canada as a UK seller, your filing deadline is typically June 15.
Don't wait until June to start your prep. At Sterlinx Global, we recommend a "data-first" approach where your bookkeeping is updated daily. This ensures that when the deadline hits, your filings are a simple click away.
6. The 25% Non-Resident Withholding Tax
If you are selling "taxable Canadian property," the purchaser is legally required to withhold 25% of the purchase price and send it to the CRA. This is a massive hit to your cash flow.
To avoid this, you must apply for a Certificate of Compliance (using Form T2062) before the sale or within 10 days after the disposition. This certificate can reduce the withholding to a percentage of the actual gain rather than the total sale price. To avoid these common pitfalls, check out our guide on mistakes you’re making with CRA tax filings.
7. Harmonized Sales Tax (HST) Varies by Province
Unlike the UK, where VAT is a flat 20% across the board, Canada’s rates change depending on where your customer is located.
- Alberta: 5% GST only.
- Ontario: 13% HST.
- Atlantic Provinces: 15% HST.
If you are shipping goods from a UK warehouse or a Canadian 3PL to a customer in Halifax, you must charge the 15% rate. Your software must be configured to calculate these regional variances accurately. Doing this will save you time and prevent you from under-charging customers and paying the difference out of your own pocket.
8. The Importance of a Canadian "Business Number" (BN)
A Business Number is your 9-digit identity with the CRA. You need this for GST/HST, corporate income tax, and even payroll if you hire Canadian staff. As a UK entity, obtaining a BN can be a bureaucratic headache involving notarized documents.
We recommend starting this process at least 8 weeks before you plan to launch in the Canadian market. Without a BN, you cannot legally import commercial goods into Canada under your own name.
9. Record Keeping and CRA Audits
The CRA requires you to keep records for six years. As a UK seller, these records must be available in English or French and, if requested, provided to the CRA in an accessible format.
If you are scaling quickly, "shoe-box accounting" won't cut it. Digital businesses must maintain records of sales, shipping manifests, and tax collected. Integrating your Shopify or Amazon store with a professional accounting suite is the only way to remain audit-ready. If you're also selling in the US, you might find our advice on US sales tax mistakes helpful for your North American strategy.
10. Treaty Relief Under the UK-Canada Tax Convention
The good news is that the UK and Canada have a double taxation treaty. This is designed to prevent you from being taxed on the same pound/dollar twice.
However, treaty relief is not automatic. You must proactively claim it on your Canadian tax returns. This usually involves demonstrating that you do not have a "Permanent Establishment" (PE) in Canada. If you have a warehouse, an office, or employees with the authority to sign contracts in Canada, you likely have a PE and will owe Canadian corporate tax.
Why Staying Updated Matters for Your Growth
The Canadian tax landscape is shifting rapidly in 2026. With the introduction of more robust digital tracking and the CRA's focus on non-resident compliance, UK sellers can no longer "fly under the radar."
The benefit of staying compliant is simple: it makes your business bankable and scalable. When the time comes to sell your digital brand or seek investment, having a clean bill of health from the CRA is a massive asset. On the flip side, failing to comply can lead to frozen accounts and seized inventory at the border.
Frequently Asked Questions
Do I need a Canadian bank account to sell in Canada?
While not strictly required by the CRA, having a Canadian dollar account (or a multi-currency account like Wise or Revolut Business) will save you thousands in FX fees when paying your GST/HST bills.
Can I use my UK Limited Company to sell in Canada?
Yes, you can. You don't necessarily need to incorporate a local Canadian subsidiary. However, your UK company will still need to register for a Business Number and GST/HST if you meet the thresholds.
How often do I need to file GST/HST returns?
This depends on your annual taxable sales. Most SMEs file quarterly, but if your sales are over $6 million CAD, you must file monthly. If they are under $1.5 million, you may be eligible to file annually.
What happens if I forget to charge GST/HST to a Canadian customer?
The CRA considers the price you charged to be "tax-inclusive" if you are registered. This means you will have to pay the tax portion out of your profit margin. This is why configuring your store correctly is essential.
How Sterlinx Global Can Help
Navigating cross-border compliance doesn't have to be a nightmare. At Sterlinx Global, we act as your dedicated tax compliance suite. From bookkeeping and GST/HST calculations to filing your year-end Canadian returns, we handle the technical execution while you focus on brand growth.
If you're ready to stop worrying about the CRA and start scaling your Canadian presence, let’s get your compliance sorted.
Talk to an expert today to see how we can streamline your North American operations.
