2022 Free Guide on Exempt Supplies

by | Jun 3, 2022

Have you been wondering about 2022 exempt supplies from GST/HST? Or are you not sure who has to charge GST/HST? If you give lessons, such as how to play the piano or guitar, or you provide childcare, these are exempt supplies GST/HST. You should know what is taxable and what is not. There are many supplies in Canada that are exempt from GST/HST such as groceries, medical equipment, some educational services, and much more. You can learn about this more and clear your confusion as Yogi & Associates have briefly given a 2022  free guide on exempt supplies in Canada.

The majority of products and services bought or imported into Canada are subject to taxes, however some supply are exempt. The federal government collects GST on behalf of the provinces, while a provincial government collects PST on behalf of the federal government. While HST is paid when items are sold by businesses at retail, GST is collected at every production level and distribution.

You should be aware of all the different kinds of supplies that are subject to taxation as well as those that are exempt from the HST/GST. Also, many Canadian residents are still confused as to under which products they can charge GST/HST. Well, don’t worry again because Yogi & Associates has an expert accountant in Mississauga to help clear this confusion. So, reading this blog will help you understand taxable goods/services as well as give you a free guide on exempt supplies from charging GST/HST.

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

2022 Free Guide on Exempt Supplies

1. What is GST?

2. What is HST?

3. Exempt Supplies from GST/HST:

Exempt supplies

1. What is GST?

The majority of products and services purchased in Canada are subject to the GST, which is a consumption tax. Businesses providing products and services must report the GST to the Canada Revenue Agency, but consumers pay the GST to the businesses. The amount of GST charged varies according on the harmonised or provincial sales tax rate.

2. What is HST?

When they offer products and services, Canadian citizens and corporations are required to collect both federal and provincial taxes. Both of these factors are combined in the HST, which affects how much products and services cost. However, that tax does not go straight to CRA. It is gathered by the seller, after which CRA distributes it.

HST is now implemented in five Canadian provinces:

New Brunswick 15%
Newfoundland and Labrador 15%
Nova Scotia 15%
Prince Edward Island 15%
Ontario 13%
Exempt supplies

3. Free Guide on Exempt Supplies from GST/HST in Canada:

There are two types of exempt supplies from GST/HST in Canada:

  1. Zero-rated products and services
  2. Exempt products and services

Zero-rated Products and Services:

Zero-rated tax is one of the types of exempt supplies, as, it is imposed on generally taxable items but, is charged at the ZERO rate by the Canada Revenue Agency, which, for sure, does not affect the cost of goods and services. So, here are some examples of exempt supplies 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.

Exempt Productss and Services:

This is a different category of exempt supply where all the items are free of tax. You cannot make an input tax credit claim for products and services that are GST/HST exempt. Thus, you cannot register for GST/HST if your company only produces exempt supplies.

Here are the examples of exempt services from GST/HST:

  • 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
  • Charities, governments, non-profit organisations, towns, and other public service providers offer some properties.

Note: From the perspective of the consumer, there is no distinction between GST/HST zero-rated and exempt products and services; in both cases, he or she is not charged.

Being a small supplier:

If you run a business on a small scale, then you will not be considered a large supplier and so you won’t be required to pay GST/HST. If your business does 30,000 or less per calendar year, then CRA won’t charge GST/HST. You also cannot collect GST/HST from the customers when they purchase these goods or services.

If you want to learn about how can you return GST/HST, you can click Why is it important to return GST/HST? to read.

4. Final words!

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

Keeping yourself up-to-date on GST/HST information is important in order to submit and collect the appropriate amount of HST/GST. So, you must keep yourself updated on GST/HST information like which are exempt supplies and which ones are taxable. This gets easy for you to submit and collect HST/GST. But if you still feel like you are not getting the process, Yogi & Associates is here to answer all your questions about GST/HST.

So, full of knowledge and experience, we can help you understand the basics of exempt supplies from HST/GST in Mississauga. Our accountants are always attentive to all your needs as a client and wish to ensure that you can also balance both federal and provincial tax requirements.! Also, our team will give you the proper guidelines on how to keep yourself on track and assist you as well as your families to balance the GST/HST you pay.

Contact Yogi & Associates!