Ontario Ecommerce Chart of Accounts for Xero (Place of Supply, Free)

Ecommerce is the business model that exercises every corner of Canada’s sales tax system at once: a single morning’s orders can be taxable at 13%, 5%, and 0% depending on delivery addresses, inventory arrives with GST collected at the border instead of on a bill, and the platforms clipping fees sit on both sides of the simplified-registration line. This Xero chart gives an Ontario-based store an account structure that keeps all of it codeable.

Selling: the buyer’s province writes the invoice

Online marketplace sales defaults to ON - HST on Sales for home-province orders, and its alternatives column is the operating manual: Xero’s seeded rates for the other provinces cover Canadian orders (5% GST to Alberta, that province’s taxes for BC or Quebec), and the custom Zero Rated rate covers exports. In practice your storefront calculates per-order tax and a connector summarizes it; the chart’s job is making sure the revenue account accepts and reports each of those rates correctly rather than flattening everything to 13%.

Buying: the border replaces the supplier invoice

Inbound freight and import charges defaults to Out of Scope deliberately. When goods clear customs, the CBSA collects 5% GST and your broker bills duty and fees; the input tax credit for that import GST is supported by the B3 customs entry, not by the overseas supplier’s invoice, which usually shows no Canadian tax at all. Coding the supplier bill out of scope while claiming from the import documents keeps the ITC audit-proof. International freight itself is zero-rated, and the account lists both alternatives.

Cost of goods sold keeps the domestic case: Canadian suppliers bill 13% with a full credit, zero-rated where the goods themselves are zero-rated.

Fees, the modern ecommerce tax maze

• Marketplace and selling fees default to 13% for Canadian-billed platforms, with Out of Scope as the flagged alternative for foreign platforms on the simplified regime. The account note carries the single most valuable sentence in ecommerce GST: give registered foreign vendors your GST/HST number, because tax they charge under the simplified framework cannot be claimed back.
• Payment processing fees default to Exempt as financial services, with 13% listed for the platform-service portions that are taxable.
• Fulfilment and warehousing defaults to 13% for Canadian 3PLs, Out of Scope for foreign warehouses billing from abroad.
• Packaging and shipping supplies run at 13% with full ITCs.

Setup and rhythm

1. Add the three custom 0% rates in Xero (Tax settings, Tax rates), then import via Accounting, Chart of accounts, Import.
2. Point your storefront or connector’s tax summaries at the sales account and reconcile its rate mix monthly against the platform’s tax report.
3. File broker statements with the freight entries; they are the ITC evidence.
4. Audit fee accounts quarterly for foreign platforms that started charging tax; that is the signal to hand over your registration number.

A note on currency, because most Canadian stores earn some of their revenue in US dollars: payout batches from the platforms arrive converted, and the tax was calculated per order in Canadian terms at sale time. Keep the sales account reconciled to the platform’s Canadian-dollar tax report rather than to the bank deposits, and let Xero’s currency gains account absorb the difference. Mixing FX noise into the revenue account is how a clean rate mix turns into an unexplainable one by year end.

The transaction volume of a store makes hand-coding the first casualty. Hubdoc captures supplier bills and broker statements as they arrive. ExpenseFlow reads each document, tells Canadian-billed fees from simplified-regime charges, keeps import GST claims anchored to customs paperwork, and posts coded transactions into Xero against these accounts. Dext holds per-supplier rules steady across thousands of small documents.

The QuickBooks mirror of this chart is at Ontario ecommerce chart of accounts for QuickBooks; the rate list it draws on is the Ontario Xero tax rates reference.