Anonymised, illustrative composite. A contractor billed a client with addresses in two provinces the same way for two years — using whichever address was convenient — before learning that convenience is not what the Excise Tax Act asks for.
At a glance
A trade contractor based in Alberta had a recurring client with a head office in Alberta and an active job site in Ontario. For two years, every invoice to that client used the client’s Alberta billing address by default — it was the address on file, and it was simpler than asking which provincial tax treatment actually applied to each engagement.
That default was never the rule the Excise Tax Act actually sets. Under ETA s. 165(2), a participating province’s additional tax applies based on where the supply is actually made, and the rate itself is not a fixed number sitting in the Act — s. 123(1) gives priority to “the rate that is prescribed for the participating province,” with the Act's own Schedule VIII only a fallback when no rate has been prescribed. Treadstone Law’s guidance on exactly this situation is direct about what the test is not: “the analysis looks at which address most directly relates to the actual supply, not simple preference” — picking whichever address is convenient, or whichever “charges less tax,” is exactly the wrong approach it warns against.
Over the two years, 22 invoices totalling $310,000 pre-tax were billed against the client’s Alberta address rather than the Ontario site address where the construction services were actually supplied. Since no provincial tax rate can be safely quoted from the Act text itself — the applicable rate is whatever is currently prescribed, not a fixed Schedule VIII figure — the contractor could not simply recompute a dollar shortfall in-house. What it could establish, and did, was the scope: all 22 invoices needed re-testing against the place-of-supply rules invoice by invoice, since the job site (not the billing address) is generally what a construction service attaches to.
The decisive step was engaging a tax advisor to run the actual place-of-supply test rather than continuing to default to a billing address. Treadstone Law’s own recommendation for exactly this fact pattern is to “confirm the correct province with a tax advisor for each such client and engagement” rather than resolve it informally — because the tie-breaking factors change depending on what is being supplied, and a construction service physically performed at a job site is analyzed differently from, say, a professional service delivered remotely.
The advisor reworked all 22 invoices against the correct test and filed the resulting adjustments through the standard net tax adjustment process for the affected reporting periods. Going forward, the contractor adopted a fixed rule: the provincial tax treatment on any invoice tied to a physical job site defaults to the site address, not the client’s billing address, and any exception requires a documented place-of-supply determination first. For the wider mechanics, see how GST/HST actually applies to construction work in Canada. A related tax-timing fix from a different contractor is in the bad-debt write-off after a builder failure.
Left uncorrected, the same convenience-based default would have continued indefinitely on every future invoice to this client and, most likely, on other clients with addresses spanning provincial lines — each additional invoice compounding the number of periods eventually needing re-testing and adjustment, rather than the fixed 22-invoice, two-year correction the contractor actually faced by catching it when it did.
Any recurring client with more than one provincial address is a standing signal to check, not assume — log which address is the basis for tax treatment on each specific engagement at the time of invoicing, tied to where the work is actually performed, rather than defaulting to whichever address happens to be on file.
Treadstone Law's guidance frames the place-of-supply test around what a service "most directly relates to," and for a construction service physically performed somewhere, that is generally the site where the work happens, not wherever the client's accounting department happens to sit. The contractor's new default rule reflects that directly: any invoice tied to a physical job site defaults to the site address unless a documented place-of-supply determination says otherwise, which removes the two-year pattern's actual cause — a billing team defaulting to whichever address was already on file rather than asking, for each new engagement, where the work was physically being performed.
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