What are zero-rated and GST/HST-exempt supplies in Canada?

Not all goods and services in Canada are subject to GST/HST at the standard rate. The CRA distinguishes between three categories: **Taxable supplies (5%/13%/15%):** Most goods and services sold by businesses — fully subject to GST/HST. Suppliers charge GST/HST and can claim ITCs on related purchases. **Zero-rated supplies (0%):** These are technically subject to GST/HST but at a 0% rate. Suppliers don't charge GST/HST, but they CAN still claim ITCs on their related business purchases. Common examples: - Basic groceries (bread, milk, vegetables, fresh meat) - Prescription drugs - Exports of goods and services - Most agricultural and fishing products **Exempt supplies:** These are not subject to GST/HST at all, and suppliers CANNOT claim ITCs on related purchases. Common examples: - Most healthcare services (doctors, dentists, hospitals) - Most educational services - Financial services (bank charges, interest, credit) - Long-term residential rents - Most childcare services **Why it matters:** If your business primarily provides exempt supplies, you cannot register for GST/HST and cannot claim ITCs. If you provide a mix, you must apportion your ITCs accordingly.

• Taxable: 5/13/15% GST/HST — suppliers collect GST/HST and claim ITCs
• Zero-rated (0%): no GST/HST charged but suppliers still claim ITCs
• Zero-rated: basic groceries, exports, most agricultural products
• Exempt: no GST/HST and NO ITC claims (healthcare, financial services, residential rent)
• Mixed-supply businesses must apportion ITCs between taxable and exempt