Consignment sales: when principal and agent charge tax
Consignment is a common way to get goods to market: a principal places stock with a consignee — a dealer, a shop, a distributor — who sells it on the principal's behalf and takes a commission. The sales tax question is when the tax arises and who accounts for it. The answer hinges on a single fact: ownership does not move when the goods are placed on consignment.
Placing stock is not a supply
On a genuine consignment, ownership of the goods stays with the principal until the consignee sells them to an end customer. Because there is no change of ownership when the stock is placed with the consignee, that movement is generally not a taxable supply — it is much like moving stock to your own branch. The goods sit with the consignee as the principal's stock, awaiting sale. So the act of consigning does not, by itself, trigger sales tax, and treating each consignment despatch as a taxable sale would charge tax far too early.
The taxable supply is the onward sale
The taxable supply arises when the goods are actually sold to the end customer. That sale — not the earlier placement — is the tax point. Until it happens, nothing has been supplied in the sales tax sense. This makes it essential to distinguish the two events: the (non-taxable) placement of goods on consignment, and the (taxable) sale to the customer. Businesses that blur them either charge tax too soon, on placement, or risk missing the tax when the consignee sells. Clear records of what was placed and what was sold keep the timing straight.
Whose tax applies
Who accounts for the tax depends on the structure of the arrangement. In a typical consignment, the principal is treated as supplying the end customer — the consignee acts on the principal's behalf — so the principal's sales tax applies to the sale of the goods, while the consignee's commission is a separate service (a provincial matter, related to principal-agent and commission arrangements). Other arrangements instead have the consignee buy and resell the goods, which is a different chain of supplies. The two look similar commercially but differ for tax, so the documents should make the structure clear rather than leaving it to inference.
Common mistakes
- Charging sales tax when goods are placed on consignment, before any sale has happened.
- Missing the tax when the consignee finally sells the goods to a customer.
- Leaving the arrangement undocumented, so it is unclear whether the consignee sells on the principal\'s behalf or buys and resells.
- Forgetting that the consignee\'s commission is a separate service that may attract provincial tax.
We structure and document consignment arrangements so the tax point and the responsible party are clear, and commissions are handled correctly.
Avail our sales tax servicesWhere it fits
Consignment placement follows the same "no change of ownership, no supply" logic as branch transfers, and the commission side leads into principal-agent and commission arrangements. Because the commission is a service while the goods are goods, it also touches the federal-versus-provincial divide, and the whole arrangement depends on clear invoicing. Tax the onward sale, not the placement.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Questions people also ask
Is sending goods to a consignee a taxable supply?
Generally no. On a true consignment, ownership of the goods stays with the principal until the consignee sells them to an end customer. Because there is no change of ownership when the stock is placed with the consignee, that movement is generally not a taxable supply — much like moving stock to your own branch. The taxable event comes later, at the sale to the customer.
When does sales tax arise on consignment stock?
When the goods are actually sold to the end customer. That sale is the taxable supply. Until then the goods sit with the consignee as the principal's stock. So the tax point is the onward sale, not the placement of goods on consignment, which is why distinguishing the two events clearly matters for getting the timing right.
Who charges the sales tax, the principal or the consignee?
It depends on the structure. In a typical consignment the principal is treated as supplying the end customer, through the consignee acting on the principal's behalf, so the principal's sales tax applies to the sale; the consignee's commission is a separate service. Some arrangements instead have the consignee buy and resell. The documents should make clear which structure is in place.
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