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Last updated: Nov. 16, 2023
Like most small business owners, Canadian farmers are responsible for collecting sales tax on goods and services made in Canada. However, unlike other industries, many farm products are exempt from sales taxes.
The goods and services tax (GST) is a nationwide 5 percent sales tax collected by almost all businesses. However, some provinces—Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island—collect GST in addition to a province-specific sales tax, the harmonized sales tax (HST).
Let’s take a closer look at paying GST/HST, including who is required to collect these taxes and which agricultural products are—and are not—exempt.
Who has to collect GST/HST?
According to the Canadian Revenue Agency (CRA), any agricultural business that exceeds $30,000 in annual sales of GST/HST-taxable goods and services must collect GST/HST on nonexempt agricultural supplies and products according to the following schedule:
If you exceed the $30,000 threshold in a single calendar quarter, you must register for GST/HST no later than the day of the supply sale that exceeded the $30,000 threshold. You are responsible for charging GST/HST on the supply that pushed sales past $30,000.
If you exceed the $30,000 threshold over the previous four or fewer consecutive calendar quarters but not in a single calendar quarter, you must register for GST/HST no later than the beginning of the month after you exceed the threshold. You are responsible for charging GST/HST on your taxable supplies starting on your effective date of registration.
What farm products are and are not exempt from GST/HST?
Most sales in Canada are subject to GST/HST; however, many farm products are classified as zero-rated, which means they are taxable at the rate of 0 percent. Although GST/HST isn’t collected on zero-rated items, some business owners may be eligible to claim input tax credits for paying GST/HST on property and services acquired or imported into the province to produce these items.
Determining the taxable status of Canadian agricultural products can get pretty complicated.
Examples of Supplies and Services That Are Exempt from GST/HST
- Farm livestock, poultry, or bees that are raised to be used for human consumption or produce a product that is for human consumption (e.g., meat, eggs, milk, honey, unprocessed wool)
- Grains, seeds, hay, or other fodder crops that are ordinarily used as or produce food for human consumption or feed for farm livestock or poultry
- Most farm equipment and machinery, such as tractors, harvesters, combines, fully operational milking systems, refrigerated bulk milk coolers, and leafcutter bees
Examples of Products and Services That Are Typically Not Exempt from GST/HST
- Fresh-cut flowers or foliage
- Bedding plants
- Sod
- Living trees
- Gravel, stones, rock, soil, and soil additives
- Non-bulk seeds
- Hay and fertilizer
- Stud or artificial insemination services
- Crop dusting
- Contract work, including field clearing, tilling, and harvesting done by one farmer on behalf of another
- Road-clearing services
- Storing goods
Although livestock sold for human consumption is zero-rated, nonfood livestock and certain animal products are not:
- Horses, mules, and donkeys
- Peacocks
- Mink, fox, and other fur-bearing animals
- Animals sold as pets
- Processed wool, furs, animal hides, feathers, and down
- Beeswax
- Maple sugar candy
Visit the CRA website for a full list of zero-rated and nonexempt agricultural products.
Take the complexity out of GST/HST.
When it comes to collecting and paying GST, HST, and other taxes, Canadian farmers have to wade through a lot of information to ensure they are following the rules and that they are getting the tax benefits they are entitled to.
FBC’s farm tax specialists can help you navigate GST/HST with confidence. Request your free consultation online or call us at 1-800-265-1002 to schedule a time that works with your schedule.
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