What's the difference between zero-rated and exempt sales for GST

Both zero-rated and exempt sales mean your customer pays no GST/HST, so from their side the two look identical. The difference is on your side, and it comes down to one thing: whether you can recover the GST/HST you paid on the supplies behind that sale.

• Zero-rated sales are still taxable, just taxed at a rate of 0%. Because they count as taxable supplies, you can generally claim input tax credits for the GST/HST you paid on your related business purchases.
• Exempt sales sit outside the GST/HST system. You charge no tax, and you generally cannot claim input tax credits on the purchases behind them.

Most exports of goods and services from Canada are zero-rated rather than exempt, which is why an exporting seller can charge 0% and still recover their input tax. A separate, narrower set of supplies (certain financial, health, and educational services, some residential rent) is exempt.

Why the distinction matters for your books

The two blur together because both show up as "no tax charged", but they behave differently on your return: a zero-rated sale still counts as a taxable supply and preserves your credits, while an exempt one does not.

Where it gets specific to you

Which category a particular sale falls into turns on exactly what you sold and to whom, and it is the kind of thing worth confirming with your accountant rather than assuming. TALISK_HQ records the sale and its tax; whether it is correctly zero-rated or exempt is their call.