Plain meaning
Supplies that are not subject to GST/HST and generally do not allow input tax credits on related costs.
Also called
exempt supply
Key points
- Exempt Supplies is part of the GST/HST system and depends on whether a supply, person, or expense meets the statutory requirements.
- The distinction between taxable, zero-rated, and exempt activity can change whether tax is collected and whether input tax credits are available.
- Businesses should keep invoices, contracts, and working papers because GST/HST treatment is often reviewed through documentation.
- Registration, filing frequency, remittance timing, and rebate claims can affect cash flow even when the final tax cost is passed on to customers.
Why it comes up
The difference between exempt and zero-rated supplies is important for charities, financial services, housing, health care, and education. It can affect business cash flow, compliance work, pricing, payroll, remittances, deductions, or audit exposure.