What Are Exempt Goods and Services?

Exempt goods and services gst/hst
In general as tax payers we just accept the goods and services tax as part of the expense of the majority of the purchases that we make. If we are selling something we often don’t know if we should be charging the GST/HST and it gets confusing. To add to this there are some goods and services that are exempt from this tax.


This is a type of tax that is applied to most properties and services throughout Canada. Each province handles it a little differently, but many of the provinces decided to combine their provincial taxes on sales with the GST to create the HST (harmonized sales tax).


Being as each province could have their own sales tax rate, it also means that the HST rates could be different for each of them as well.


Chances are on occasion you may have made a purchase or had a service performed and were pleasantly surprised to find there was no tax to be paid. You may also have wondered why these providers can get away without having to collect tax, or are they being kind and covering this expense themselves? Probably not as it means what they are offering is exempt goods and services. For example, charities are often allowed to do this.


In your personal life you are probably not too concerned about this, and are just happy when on occasion you don’t have to pay the tax. In the business world however, knowing the GST/HST rules is very important, and you will definitely want to know how what you plan on doing or selling is rated under this specific tax obligation. It could be taxable, zero rated, or exempt.


Some common services are considered to exempt like residential accommodation that is on a long term basis. Or day care services that are not 24 hours per day and the children being cared for are fourteen or younger.   These are just a few of many examples.


If you are going to be the provider of a service or product then you need to clearly know what is exempt, what is classed as zero- rated and what is taxable.   You then need to learn the rules and regulations for collection of the tax, submitting it to the proper government department, and how to apply for a rebates.


Once again like almost every tax situation we face as Canadians it can be complex. Why not put your business taxes in the hands of Sam Seidman, who is known to be the tax accountant to go to when you want your tax obligations done right.


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Sam Seidman, CPA, CA, LPA
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