What's Taxable in Canada? Taxable, Zero-Rated and Exempt — The Complete Map

Every sale you make lands in one of three buckets — taxable, zero-rated, or exempt — and the bucket decides whether you charge tax and whether you recover it on your costs. This is the master map; the category guides below go deeper.

The three buckets in one table

Bucket	You charge	Your ITCs
Taxable	GST/HST at the customer's provincial rate	Recoverable
Zero-rated	0% — taxable, at a zero rate	Recoverable
Exempt	Nothing — outside the system	Not recoverable

Taxable: the default

Unless a sale fits a specific zero-rated or exempt category, it's taxable — most goods, most services, software, subscriptions, short-term accommodation, delivery charges riding on taxable goods. When in doubt, the safe assumption is taxable.

Zero-rated: the export-and-essentials list

Basic groceries, prescription drugs, certain medical devices, exports of goods, many services to non-residents, international freight. The business significance: these sales preserve your ITCs, which is why exporters live in refund position. Full breakdown in our zero-rated vs exempt guide.

Exempt: outside the system entirely

Long-term residential rent, most health and dental services, daycare, most financial services, used residential housing, many educational services. No tax charged — and the costs behind these revenues carry unrecoverable GST/HST, which is a real margin consideration for exempt businesses.

Mixed businesses: the apportionment zone

Earn both taxable and exempt revenue and your ITCs must be split between them — a methodology question and a perennial audit target. Our apportionment guide covers it; BluTax builds the methodology into your filings.

To determine what GST/HST rate to charge, you can review on the CRA website here.

Frequently asked questions

How do I know if my product is taxable?

Default to taxable unless it fits a specific zero-rated category (groceries, exports, prescription drugs) or exempt category (residential rent, most health services, financial services).

What's the difference between zero-rated and exempt?

Both mean no tax charged — but zero-rated sales preserve your input tax credits and exempt sales kill them. See the dedicated comparison guide.

Talk to BluTax

Tell us about your business and we’ll handle the rest. Book a discovery call and we’ll confirm exactly what applies to you — no jargon, no surprises.

This page provides general information about Canadian sales tax and is not tax advice. Rates and thresholds are current as of drafting; BluTax confirms the specifics for each client’s situation.