What we mean by taxable, zero-rated, and exempt supplies?

It is important to know which property and services are taxable and at what rate. You also need to know which property and services are exempt from the GST/HST.

Taxable supplies

Most supplies of property and services supplied in or imported into Canada are subject to the GST/HST.

The GST is a tax that applies to the supply of most property and services in Alberta, Manitoba, North West Territories, Nunavut, Prince Edward Island, Quebec, Saskatchewan and the Yukon. The GST rate for these provinces and territories is 5%.

The HST is a tax that applies to the supply of most property and services in participating provinces of British Columbia, Nova Scotia, New Brunswick, Newfoundland and Labrador and Ontario. The HST is composed of the GST and their respective provincial tax. Generally, the HST applies to the same base of property and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on designated items. For more information, see Reason code 16.

For the HST rates of each province, see GST/HST rates.

Zero-rated supplies

Some supplies of property and services are taxable at the rate of 0% (zero-rated). This means that you do not charge GST/HST on these supplies. Some common examples of zero-rated supplies of property and services are:

• basic groceries such as milk, bread, and vegetables;
• agricultural products such as grain, raw wool;
• prescription drugs and drug-dispensing fees; and
• medical devices such as hearing aids and artificial teeth.

Exempt supplies

A small number of supplies of property and services are exempt from the GST/HST. This means the GST/HST is not charged. Some common examples of exempt supplies of property and services are:

• used residential housing;
• most health care and dental services;
• certain childcare services; and
• many educational services.