One of Canada's best known online retailers is apologizing to customers in three provinces and promising to reimburse them after charging too much tax on children's clothing.

Sears.ca made the pledge after being told of the problem by CBC News.

Nova Scotia, P.E.I. and Ontario exempt children's clothing and footwear from the provincial portion of the HST, which means residents should only pay the federal five per cent portion of the tax. Islanders and Nova Scotians save 10 per cent while Ontarians save eight per cent.

However, CBC News was alerted by a viewer to the fact that Sears.ca was charging the full HST.

CBC News purchased items from the online retailer in the three provinces and found in each instance the company charged more tax than required.

The company was not breaking any laws, however it is onerous for consumers to apply for the rebate from the Canada Revenue Agency and other major retailers charge just five per cent.

This order confirmation from Sears.ca shows a 15 per cent tax on a child's clothing item that should be taxed at five per cent. (CBC)

Change to website caused 'error'

Sears Canada spokesman Vincent Power said a change in its website technology implemented in November is to blame. Power calls it "an error" that mostly affected orders placed since then.

"Prior to this change, the exemptions had been properly applied, just as they are in our stores," Power told CBC News in an email.

CBC News shopped at several stores and their online sites, including Walmart, Forever 21 and Hudson's Bay. In every instance, with the exception of Sears.ca, the businesses charged only the five per cent tax on children's clothing.

Not difficult to accommodate exemptions

News that Sears.ca was charging the full HST came as a surprise to Halifax businesswomen and mother Jolyn Swain, whose company, Nurtured, also sells various items for children, including toys, strollers and clothing.

Some are fully taxed. Some qualify for the tax exemption. Swain said it was no problem to set up her system to accommodate both.

"The onus is on us as local retailers to know what the provincial tax rules are and the exclusions and exemptions and so forth," she said. "It's our responsibility to take care of the people who choose to shop with us."

Power said the technology needed to implement the exemption on children's clothing is being reinstalled for Sears.ca and was expected to be in place by Friday. Sears is also "automatically refunding" customers incorrectly charged provincial tax.

"Every customer will be made good on any transaction related to this matter," he said, adding Sears apologizes to customers.

Some parents unaware of tax exemptions

It seems some parents don't even know about the tax exemptions.

"This is the first I've heard of it," Erice Amedjkouh told CBC News as she watched her sons, aged two and eight, play in a north-end Halifax park.

On its website, Nova Scotia's Department of Finance says the provincial portion of the HST does not apply to certain essential items and is "rebated at the time of purchase." It then lists children's clothing, footwear and diapers.

Even so, there is no provincial or federal requirement that retailers charge just five per cent.

"The province does not have the authority to make the rebate mandatory as GST/HST is administered by the federal government," a spokeswoman for the NS finance department told CBC News in an email.

The Canada Revenue Agency says it does not track which businesses collect the entire 15 per cent rate versus the five percent they're meant to charge on exempted items, but expects if the tax is collected, it will be forwarded to the government.

In response to questions from CBC News, the CRA said in an emailed statement that it "operates on a voluntary tax system and relies on businesses to assess their own GST/HST liabilities, file returns, and pay amounts when due."

The email said the CRA conducts "GST/HST business audits and examinations to ensure that businesses are meeting their tax obligations, including remitting the tax that they are required to remit."

The Canada Revenue Agency says that if the retailer does not credit the rebate for items that qualify, consumers can apply directly to the agency for the money.

Beware: the application form is three pages long.

"I don't have time for that," Amedjkouh said. "I didn't know you had to go through the process, and even if that's what I have to do I won't have time for it, for sure."