As of 2024, over 33 million people in Canada are expected to file taxes. Whether you’re a resident or a non-resident of Canada, you’ll have certain tax obligations to meet — but here’s the silver lining: not everything is taxed. That’s a relief, isn’t it?
Canada’s taxation system recognizes the importance of essential goods and services. Some items are not taxed at all, while others may be taxed at a rate of zero. This is especially helpful when it comes to daily necessities or products that support health, well-being, and economic productivity.
Let’s break down the different categories of things that are not taxed in Canada — and why they matter.
Understanding Zero-Rated vs. Exempt Items
There are two main types of non-taxable goods and services in Canada:
- Zero-rated itemsare technically taxable, but the Goods and Services Tax (GST) or Harmonized Sales Tax (HST) applied to them is zero percent.
- Exempt items, on the other hand, are completely excluded from GST/HST. This means tax is neither charged on the sale nor can it be claimed back by businesses.
Basic Groceries
It’s a win for everyone that basic necessities like groceries are not taxed in Canada. These zero-rated items ensure that Canadians of all income levels can access the essentials without an added tax burden.
Non-taxable grocery items include:
- Dairy products (milk, cheese, yogurt)
- Fresh and frozen vegetables
- Meats, poultry, and fish
- Fresh fruits
- Eggs
- Cereal grains
- Coffee beans and tea leaves (not ready-made drinks)
- Baking ingredients like flour and sugar
However, not all grocery store items are tax-free — prepared meals, snack foods, carbonated drinks, and candy are often subject to regular GST/HST.
Farm Livestock and Equipment
Canada’s agricultural sector also benefits from specific tax exemptions. If livestock is being raised for human consumption, it is considered zero-rated.
Examples of zero-rated livestock and farming supplies include:
- Chickens, pigs, goats, sheep, and rabbits raised for meat or dairy
- Feed, seed, fertilizers, and pesticides used in commercial farming
- Farm machinery such as tractors, balers, harvesters, and seeders
However, animals raised as pets or for fur production are not tax-exempt. Likewise, hobby farm purchases typically don’t qualify for these exemptions unless the farm is a registered business.
Prescription Drugs
All prescription medications that require a licensed medical practitioner’s authorization are zero-rated in Canada. This also applies to dispensing fees charged by pharmacists.
Included in this category:
- Antibiotics
- Insulin and diabetic supplies
- Birth control pills
- Antidepressants
- ADHD and asthma medications
On the other hand, over-the-counter drugs — such as aspirin, vitamins, cold remedies, and supplements — are taxed unless specifically prescribed.
Medical Devices and Aids
Accessibility and health are taken seriously in Canada, and the tax code reflects that. A wide range of medical devices are tax-free when sold or rented for personal use, often with a prescription.
Non-taxable medical devices include:
- Hearing aids
- Wheelchairs and mobility scooters
- Canes and walkers
- CPAP machines and asthma inhalers
- Orthodontic appliances and braces
- Eyeglasses and contact lenses prescribed by an eye care professional
Even service animals like guide dogs are non-taxable, provided they are trained to assist individuals with disabilities.
Feminine Hygiene Products
Canada has made strides in removing outdated gender biases in its tax system. Since July 1, 2015, feminine hygiene products have been fully exempt from GST/HST.
This includes:
- Tampons
- Sanitary pads
- Panty liners
- Menstrual cups
Exports from Canada
Selling goods and services internationally? You’re in luck.
Exports are zero-rated, meaning that although they are taxable, they carry a 0% tax rate when sold to customers outside Canada. This applies to:
- Digital products and software
- Professional services provided to international clients
- Tangible goods shipped out of the country
Other Commonly Exempt Services
In addition to the items listed above, certain services are also exempt from GST/HST, including:
- Residential rent (for long-term rentals)
- Most health care and dental services
- Educational services such as tutoring or courses leading to a diploma
- Legal aid and counselling services provided by registered nonprofits
No Tax, No Trouble
While paying taxes is an essential part of keeping Canada’s infrastructure, healthcare, and education systems running, it’s good to know that not everything comes with a tax tag.
At Accounting Plus Financial Services Inc., we’re here to help you understand the ins and outs of Canadian tax law. Whether you’re filing personal taxes, running a business, or navigating a complex tax issue as a non-resident, we can guide you through it all.
Our tax and online bookkeeping experts specialize in helping clients across Toronto, Markham, Richmond Hill, and beyond. We also offer cloud accounting solutions powered by Xero, so you can manage your finances anytime, anywhere.
Need Help With Taxes?
Don’t pay more than you have to. Let us help you stay compliant, reduce your tax burden, and take the stress out of tax season with our CRA inquiry assistance.
Call us at 905-771-1131 or email info@accplus.ca to book your free consultation today.
