Exemption for charging GST/HST

If you are a Canadian businessman, you must know the difference between taxable products and exempt products from GST...

Jan. 25, 2022

If you are selling goods and services, you must collect GST/HST from customers and for that, you should know about the products which are taxable and which are excluded from HST/GST. Reading this blog will help you understand taxable goods and services and about the products that are exempt from charging GST/HST.

What is GST?

The Goods and Services Tax (GST) is a value-added tax charged on the majority of goods and services made in Canada as well as real estate (land, buildings) and intangible personal property (trademark, patent rights, and digitized items). Consumers pay the GST to the businesses, but businesses selling the goods and services must submit the GST to the Canada Revenue Agency.

What is HST?

Canadian residents and businesses pay harmonized Sales Tax (HST). HST is a combination of federal and provincial taxes. By adding the HST rate to the cost of goods and services, the seller collects the tax, which is then sent to the Canada Revenue Agency (CRA). The CRA then distributes the provincial part of the HST to the government of each province.

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James M. Wayne: "The payment of taxes gives a right to protection."

HST is now implemented in five Canadian provinces: New Brunswick (15%), Newfoundland and Labrador (15%), Nova Scotia (15%), Ontario (13%) and Prince Edward Island (15%).

Exempt services from GST/HST

Zero-rated tax is imposed on generally taxable items but is charged at the ZERO rate by the Canada Revenue Agency, which does not affect the cost of goods and services. Hence, no GST/HST is collected on zero-rated products. Here are some examples of GST/HST items and services that are zero-rated: 

  • Farming equipment, such as tractors and their associated equipment and machinery, is also zero-rated.
  • Medicines/Pharmaceuticals: those medicines or drugs that are prescribed but not under the pharmacist's control.
  • Some of the medical devices, such as artificial teeth, hearing aids, wheelchairs, canes, vehicle adaptations to accommodate a disability, orthodontics, etc. Insulin pumps, syringes, and pens, as well as urinary catheters, are also featured.
  • Tampons, sanitary napkins, and other feminine hygiene goods are also included in zero-rated products.
  • Products from the fishing industry.
  • Farm livestock sold for human use, but not for pet or reproduction purposes, such as dogs, cats, or horses, will not be labeled as zero-rated.
  • Basic Grocery includes meat, dairy, vegetables, tea, and coffee but excludes snacks, soda, booze, and candy.

Exempted GST/HST Goods and Services:

Some goods and services are exempted from GST/HST mean they are not chargeable to tax and do not have any effect on the cost of goods and services. In the case of exempted GST/HST goods and services, you cannot claim input tax credits. If your business only makes exempt supplies, you can't register for GST/HST. Some goods and services are exempt from GST/HST, such as:

  • Used residential house for sale.
  • Most of the health care and medical facilities.
  • Child care services, in which children less than 14 are taken care of.
  • Many educational services
  • Music lessons
  • Some properties are provided by charities and governments, non-profit organizations, municipalities, and other public service bodies.

There is no difference between GST/HST zero-rated and exempt goods and services from the point of view of the consumers; in neither case does he or she get charged.

Being a small supplier:

If you are a small supplier, which means you run a business on a small scale, you won't be charged GST/HST, as well as no GST/HST will be collected from you. If your business is doing 30,000 or less per year, CRA will not charge GST/HST, and you cannot collect GST/HST from the customers also.

Final words!

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Register your business in Canada today

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"If you show people the problems and you show people the solutions, they will be moved to act." Bill gates

You must keep yourself updated on GST/HST information like what goods and services are zero-rated and which ones are taxable. This gets easy for you to submit and collect HST/GST. Yogi & Associates gives you the proper guidelines on how to keep yourself on track and assists you and your families to balance the GST/HST you pay.

Rafia Khalil

Executive Journalist

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