Sales tax is where growing e-commerce businesses most often discover they have been quietly non-compliant for a year or more. The mechanics are not hard, but they change as you scale, and the rules are different on each side of the border. A seller who was perfectly compliant at $300,000 in revenue can be exposed in three states and two provinces by the time they hit $2 million, without ever doing anything differently.
Here is how to think about it, on both sides of the border, as you grow.
The Canadian side: GST/HST and the provincial layer
In Canada, once your taxable revenue crosses $30,000 over four consecutive quarters, you are required to register for GST/HST and start charging it. That part most sellers get right. Where it gets complicated is that the rate you charge depends on where your customer is, not where you are.
A Vancouver seller shipping across the country is charging 5% GST to one province, 13% HST to another, and 12% combined GST and PST to a third, all from the same store. Selling into three provinces does not mean one sales tax rule. It means several, applied by destination. As your order volume spreads across the country, the number of rules you are responsible for grows with it.
There is an upside that proper bookkeeping captures. The GST/HST you pay on your own business purchases, the input tax credits, offsets what you collect. Sellers with sloppy books routinely leave this recovery on the table, because the tax they paid was never tracked properly. Clean books turn sales tax from pure cost into a recoverable position.
The US side: economic nexus and why 2026 matters
If you sell into the United States, a different system applies, and it has been tightening. Since the 2018 Wayfair decision, US states can require you to collect their sales tax once you cross an economic threshold there, even with no physical presence in the state. The common trigger is $100,000 in sales into a state, though the rules vary by state.
What makes 2026 worth paying attention to is the direction of travel. States have been removing their transaction-count thresholds and moving to revenue-only triggers. Illinois removed its 200-transaction threshold on January 1, 2026, and Kentucky’s is scheduled to come off on August 1, 2026. The practical effect is mixed. Removing a low transaction count actually protects small, high-volume sellers who used to trip nexus on order count alone. But the broader pattern is states tightening and enforcing, and enforcement is rising alongside it.
There is also a physical-nexus trap specific to Amazon sellers. If you use FBA, your inventory sitting in an Amazon warehouse in a given state can itself create nexus there, separate from any sales threshold. Many FBA sellers have nexus they have never accounted for, simply because Amazon moved their stock.
The practical takeaway is to monitor your approach to each threshold, not just react after you cross one. Most states measure nexus on a rolling or prior-period basis, so by the time you notice you have crossed, you may already owe tax you never collected. Watching your state-by-state sales as you grow lets you register the moment you are required to, charge the tax to your customers from that point, and avoid paying it out of your own margin later. The cost of crossing a threshold quietly is that the back tax comes out of your pocket. The cost of watching for it is a few minutes of tracking.
Marketplace facilitator rules, which help but do not solve it
There is one piece of relief worth understanding. In most US states, marketplace facilitator laws require the platform to collect and remit sales tax on sales made through it. So for your Amazon marketplace sales, Amazon generally handles the state sales tax.
The trap is assuming this covers everything. It does not cover the sales you make through your own Shopify store, which remain your responsibility. A multi-channel seller has to separate marketplace-collected sales from direct sales, because the compliance obligation is different for each. Blending them is how sellers end up either over-remitting or missing a filing entirely.
The cost of getting it wrong
Sales tax non-compliance is not retroactively forgiven. If you crossed a threshold and did not register, states can pursue the back tax you should have collected, plus penalties and interest. Because the obligation accrues quietly as you grow, the bill can cover a year or more of sales before anyone notices. This is the kind of liability that surfaces during due diligence when you try to sell the business, at the worst possible moment.
What to do as you scale
Track your sales by destination, both by province in Canada and by state in the US, so you can see where you are approaching a threshold before you cross it. Separate your marketplace sales from your direct sales. And if you are an FBA seller, find out which states hold your inventory.
This is exactly the work our cross-border e-commerce setup is built for. If you are scaling across provinces or selling into the US and are not certain where you stand, book a free Diagnostic. We will map your sales tax exposure on both sides of the border and tell you where you need to act.
