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GST/HST Exempt vs Zero-Rated Supplies

Do you know the difference between GST/HST exempt vs zero-rated supplies? Below is an explanation of each type, as well as some examples for you.

GST/HST Exempt supplies

Some of the supplies (goods & services) you purchase for your business are GST/HST exempt. This means you do not charge GST/ HST on these supplies; as a result, you are not entitled to claim the Input Tax Credits (ITCs) on these supplies. You also cannot register for GST/HST if your business provides only exempt supplies; unless you are a financial institution.

Here is a list of examples of supplies (goods & services) that are exempt from GST/HST:

-Sale of residential housing that was used as a place of residence for a person.
-Residential accommodation of one month or more & condominium fees.
-Most health, medical & dental services performed by licensed physicians or dentists for medical reasons.
-Day-care services for children 14 years old & younger, if the services are for less than 24 hours a day.
-Most goods and services provided by charities & public institutions.

Please note charities have different regulations & rules when it comes to GST/HST, see the Canada Revenue Agency website for more information.

GST/ HST Zero-Rated Supplies

When purchasing supplies (goods & services) for your business, the purchases may include zero-rated items. Zero-rated supplies are considered taxable; however, the GST/HST applied to them is 0%. You do not charge GST/HST on these supplies, but you may be able to claim input tax credits (ITCs) if you paid GST/HST on a portion of supplies or services acquired to provide these supplies.

Here is a list of goods & services that are zero-rated items:

-Basic groceries like milk & bread
-Most agricultural & fishing products
-Prescription drugs
-Certain medical devices like hearing aids
-Feminine hygiene products – as of July 1, 2015 changes were made, click here for more information
-Most goods & services exported from Canada
If you provide services for non-residents of Canada, they may also be zero-rated. See here for more information.

Have more questions in regards to this or need clarification? Contact us, we are here to assist you!

Photo by Charles Deluvio on Unsplash

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