Canada's sales tax landscape is layered: federal GST applies across the country at 5%, while provinces have their own sales tax systems ranging from HST (combined federal-provincial) to standalone PST regimes to Alberta's unique position with no provincial sales tax at all. For businesses operating across multiple provinces, understanding which goods and services are exempt from PST — and managing the compliance obligations correctly — is essential to avoid costly errors in either direction.
At the federal level, some supplies are fully exempt from GST (no tax, no input tax credit recovery), while others are zero-rated (technically taxable at 0% — the seller pays no GST but can claim input tax credits on their related expenses).
Key GST/HST exempt supplies include: long-term residential rents, most health care services, educational services, and most financial services. Zero-rated supplies include: basic groceries (unprepared food), prescription drugs, medical devices, and most exports.
BC PST applies at 7% on most tangible personal property and certain services. Key exemptions include: food for human consumption, prescription medications, feminine hygiene products, children's clothing under a specified price threshold, agricultural equipment and farm inputs, and most financial services.
Businesses that purchase goods for resale can obtain a PST exemption by providing their vendor with their PST registration number. Goods purchased for manufacturing that are incorporated into finished products are also typically exempt. Service businesses — especially those providing digital services — need to carefully assess BC's place-of-supply rules for digital products.
Saskatchewan PST at 6% applies broadly to goods and most services. Notable exemptions include: basic groceries, agricultural inputs (seed, fertilizer, livestock medications), manufacturing machinery when used directly in production, and residential utilities. Saskatchewan expanded PST to cover many previously exempt services — including legal services and accounting services to non-businesses — making compliance more complex for professional service firms.
Manitoba RST at 7% applies to most tangible personal property and specifically named taxable services. Exemptions include: food for human consumption, prescription drugs, clothing for children, and farm inputs used in agricultural production. Manitoba notably applies RST to certain insurance premiums — property and casualty insurance is subject to 8% RST, which many businesses overlook.
| Province | Rate | Key Exemptions |
|---|---|---|
| Alberta | No PST | N/A |
| BC | 7% | Food, prescriptions, farm inputs, resale |
| Saskatchewan | 6% | Food, agricultural inputs, manufacturing |
| Manitoba | 7% | Food, clothing (children), farm inputs |
| Ontario | HST 13% | Basic groceries, prescriptions, children's items |
| Quebec (QST) | 9.975% | Food, prescriptions, residential rents |
BC and Saskatchewan both require non-resident suppliers of digital products and services (software, streaming services, online downloads) to register for and collect PST when selling to residents of those provinces. This applies even if the seller has no physical presence in the province. The threshold for mandatory registration is $10,000 in annual sales to provincial residents in BC, and $100,000 in Saskatchewan.
Sales tax compliance across multiple provinces requires ongoing attention to rate changes, nexus determinations, exemption certificate management, and digital service rules. Our tax team helps businesses with multi-provincial operations understand their sales tax obligations and set up compliant systems. Contact us if your business is expanding into new provincial markets or has questions about your current sales tax treatment.