Tax Exemptions for SMB Owners

If you are purchasing equipment like a laser engraver or screen printer for manufacturing goods for sale, you may qualify for tax exemptions, depending on provincial and federal tax laws.

For example, in Ontario, you can apply for an Exempt Purchase Certificate (EPC) by following these steps:

1. Confirm Eligibility

You can apply for tax exemption if:

- The equipment or raw materials are used to manufacture merchandise for retail sale.

- The merchandise is sold to customers and not directly consumed by the manufacturer.

- The equipment or materials are an essential part of the production process.

2. Download & complete the form

- Get an Tax Exempt Certificate template, which can usually be downloaded from the official website of local government. For example, SMB owners in Ontario may download the tax exemption template here.

- Fill out all required sections, including: Business details (e.g., name, address, registration number), Description and purpose of the purchased goods.

3. Submit documents

- Submit the neccessry Tax Exemption Certificate to xTool. It usually takes 1-3 business days for approval.

Notes:

- The file does not need to be submitted to the government, but is provided to the supplier. xTool will keep the certificate in our records as proof that we did not collect sales tax on the transaction.

- If your business changes (e.g., address or nature of business), the certificate will need to be refilled or renewed.

- Misuse of the Tax Exempt Certificate can lead to penalties or a tax investigation. Ensure the exemption strictly applies to eligible goods used in manufacturing.

Tax Exemptions for Indigenous Groups

In general, everyone has to pay tax in Canada, except when you are an Indian, Indian band, or band-empowered entity and you meet the conditions in Technical Interpretation Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians. This policy is consistent with section 87 of the Indian Act under which personal property of an Indian or a Indian band situated on a reserve and their interests in reserves or designated lands qualify for tax relief. Inuit and Métis people are not eligible for this exemption.

Documents you need for GST/HST relief

Status card – You need to record on the invoice or other sales document an Indian’s 10-digit registry number or their band name, which is on the card.

Temporary Confirmation of Registration Document (TCRD) – Some individuals who are registered as Indians under the Indian Act will receive this document from ISC. You need to record the individual’s registration number and expiration date as shown on the TCRD to the invoice or other sales document. A photocopy of the TCRD presented at the time of a sale does not qualify as appropriate documentation.

Notes:

1. Delivery to Reserve:In most cases, Status Indians can claim a tax exemption when goods, such as laser engravers, are delivered to a reserve. Ensure the delivery address aligns with this requirement to qualify for the exemption.

2. Status Card Validity:To confirm your eligibility for the exemption, check if your Status Card is still valid. You can verify the card's status through official channels here. (https://www.sac-isc.gc.ca/eng/1100100032424/1572461852643)

For further details, refer to the relevant CRA or provincial guidelines.