What Is a Sales Tax Exemption Certificate in Canada?

A sales tax exemption certificate allows certain qualified buyers to avoid paying sales taxes on eligible purchases at the point of purchase. These exemptions vary by province and buyer type but can include buyers like nonprofits, resellers, and Indigenous organizations or consumers.

If you’re a U.S.-based (or non-Canadian) seller shipping to customers in Canada, you may be required to collect sales tax. That means you might also run into exemption certificate requests from these buyers. Then, you’ll have to sort through whether the certificate is legit and whether that buyer actually qualifies for a sales tax exemption on those items. Make a mistake and guess what? You’re the one liable for the sales tax they should have paid!

But don’t worry. This guide explains how exemption certificates work across Canada, what sellers need to verify, and how to stay compliant — whether you’re selling from within the country or abroad.

Breaking Down Canadian Sales Tax Complexity

Before we get into the details about exemption certificates, it’s important that you understand the Canadian tax system. Skip this part if you’re already an expert!

Canada has both provincial and federal sales taxes often called Provincial Sales Tax (PST) and Goods and Services Tax (GST). However, sales taxes are not charged or remitted in the same way from one province to another – and neither are exemption certificates applied the same.

GST-Only Provinces

• These are provinces that only charge the 5% federal GST and do not have a provincial sales tax.
• Provinces/Territories: Alberta, Northwest Territories, Nunavut.

HST Provinces

• Canada has a tax called the Harmonized Sales Tax (HST) that combines both the GST and the PST in certain provinces and territories. This is administered by the Canada Revenue Agency (CRA).
• Provinces/territories: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island.

Dual Tax Provinces

• These are provinces where the 5% GST and a provincial sales tax are charged separately.
• Provinces: British Columbia, Manitoba (called the RST or the Retail Sales Tax), Quebec (called the QST or Quebec Sales Tax), Saskatchewan.

Should I Treat Zero-Rated Items as Tax-Exempt?

Not exactly. In Canada, zero-rated supplies (like basic groceries, feminine hygiene products, and certain medical devices) are technically taxable—they’re just taxed at a 0% GST/HST rate. With zero-rated supplies, sellers still need to track and report these sales even though no tax is collected.

This is different from exempt buyers, who must present documentation proving they don’t have to pay tax on certain purchases.

When in doubt, remember: zero-rated is not the same as exempt, and both need to be handled correctly for compliance.

Who Qualifies for a Sales Tax Exemption in Canada?

While sales tax exemptions vary by province with some provinces exempting more groups from having to pay sales taxes, these are the types of buyers who are exempt in at least some of Canada’s provinces.

• Nonprofits and registered charities
• Indigenous organizations
• Individual Indigenous persons with a valid Indian Status Card
• Educational institutions
• Manufacturers and resellers purchasing for resale or further manufacturing
• Public bodies making purchases (ex. The federal government or the provincial government)

However, just belonging to one of these groups doesn’t automatically mean that the group is exempted from sales taxes. These bodies have to apply for an exemption certificate. This is typically done by filling out a form from the province or through other documentation such as a letter from the CRA.

Learn more about sales taxes in the following provinces:

• Ontario
• Quebec

What Does a Valid Canada Sales Tax Exemption Certificate Look Like?

So, now that you know that some of your buyers might be exempt from paying taxes, you might be wondering how you need to check that and what a valid sales tax exemption certificate would look like.

While they vary from province to province – with provinces like British Columbia and Manitoba issuing a specific provincial form rather than a certificate – typically exemption certificates include:

• Buyer’s name and contact information
• Reason for exemption or qualifying status
• Tax ID number (if applicable)
• Signature and date

In addition to official exemption certificates, CRA-issued letters may be sufficient for a sales tax exemption certificate if they clearly lay out that the buyer is exempt from paying taxes, the reason, and what kind of taxes they’re exempt from paying. Also, First Nations individuals typically use a status card for their sales tax purchase exemption.

Once you’ve received a sales tax exemption certificate, you’ll need to store it so it’s available to show the tax authority in the event of an audit. Not doing so could result in the seller being liable for the unpaid sales tax.

Do I Need to Accept Exemption Certificates If I Sell Online?

While it’s extra work to accept exemption certificates, you need to do so even if you’re just selling online to Canada if you’re liable for Canadian sales tax. That’s just part of doing business in Canada!

Important notes:

• Most ecommerce platforms (e.g. Shopify, WooCommerce) do not handle exemption validation automatically, so make sure you check if your platform does and find an alternative way to process sales tax exemption certificates if they don’t.
• You must manually review and retain certificates. That means that there isn’t an easy way for you to process these certificates at scale. This means that typically the buyer will have to email you with their exemption certificate to ask for their exemption.

Feel confused about exemption certificates and exempt sales? TaxCloud helps automate exemption validation, document storage, and rule-checking across provinces — making exemption handling simpler for cross-border sellers.

How Canadian Tax Exemptions Work by Province

Here’s where things get a little complicated! Exemptions apply differently to GST, HST, and PST depending on the province. Make sure to click the links in the table below for additional information from the provinces themselves.

• Some provinces provide exemptions for the PST portion of the HST but you’ll still have to pay the federal portion of your HST.
• Other provinces don’t give point-of-sale exemptions on certain items but provide certain groups with a rebate after the fact.
• Some groups that get a point-of-sale exemption also only get that exemption on certain kinds of purchases. For example, farmers are generally exempt on purchases related to agriculture at the point of sale but on no other types of purchases.
• Some groups only get exemptions based on the location of the purchase or delivery. For example, New Brunswick only gives exemptions to First Nations individuals if the purchase is made on reserve or is delivered to a reserve. But then Ontario gives exemptions at the point-of-sale to the same group, no matter where the purchase is made.

Here are some groups that could be exempt in specific sales tax jurisdictions at the point-of-sale.

How to Validate and Store Exemption Certificates

Because the seller is liable for sales tax if they fail to collect and store a sales tax exemption certificate, it’s important that you understand what they look like and how to review them.

What sellers must do:

• Review the exemption certificate or document for completeness and correct exemption type.
• Confirm the exemption applies to the product or service that is being purchased in the province the item is being delivered. Some provinces only provide exemptions on certain kinds of items.
• Store the exemption certificate securely (digitally or physically). You will need this if you’re ever audited.
• Keep documentation for a minimum of 6 years for audit purposes.

Need Help Managing Exemptions Across Provinces?

Sales tax exemptions in Canada come with real risk. If a buyer doesn’t qualify and you skip tax, you’re liable. Charge tax to someone who’s exempt? You could lose the sale.

Staying compliant means validating each exemption, confirming it applies in the destination province, and storing the paperwork — often for years. And that’s just Canada.

TaxCloud is launching Canadian sales tax support soon. Which means you’ll be able to manage both U.S. and Canadian compliance in one platform — including exemption tracking, rule validation, and storage.

Join the waitlist to get early access, helpful resources, and a chance to be part of our early launch.