GST/HST on Custom Apparel: Canadian Tax Rules [2026 Guide]

Understanding GST vs HST vs PST

Canada's sales tax system can be confusing, with different provinces using different approaches. When ordering custom t-shirts, hoodies, or other promotional apparel, understanding which taxes apply helps you budget accurately and comply with CRA requirements.

GST

5%

Goods and Services Tax - Federal tax applied to most goods and services across Canada. Applies in all provinces and territories.

HST

13-15%

Harmonized Sales Tax - Combined federal and provincial tax in participating provinces. Single rate, single administration.

PST/QST

6-9.975%

Provincial Sales Tax - Separate provincial tax in BC, Saskatchewan, Manitoba, and Quebec (QST). Added on top of GST.

How It Works for Custom Apparel

When you purchase custom printed t-shirts or embroidered merchandise, the applicable sales tax depends on where the goods are delivered, not where the supplier is located. If you're a business in Ontario ordering from a supplier in Alberta, you'll pay Ontario's 13% HST, not Alberta's 5% GST.

Place of Supply Rules: For tangible goods like custom apparel, the "place of supply" is where the goods are delivered. This determines which provincial tax applies. Orders shipped to multiple provinces may have different tax treatments for each shipment.

What's Taxable?

Custom apparel is considered a "taxable supply" in Canada. This includes:

Custom printed t-shirts, hoodies, and sweatshirts
Embroidered polos, jackets, and hats
Promotional merchandise (bags, accessories with custom printing)
Blank apparel purchased for resale or personal use
Design and setup fees charged for custom printing
Shipping charges on taxable goods

Pro Tip: Shipping charges on taxable goods are themselves taxable at the same rate. When budgeting for your order, remember to apply GST/HST to both the product cost and shipping.

Tax Rates by Province

Tax rates vary significantly across Canada, from 5% in Alberta to 15% in the Atlantic provinces. Here's a complete breakdown of current rates for custom apparel purchases:

Province/Territory	GST	PST/HST Provincial	Total Tax	Notes
Alberta	5%	0%	5%	GST only - lowest rate in Canada
British Columbia	5%	7% PST	12%	Children's clothing PST exempt
Manitoba	5%	7% RST	12%	RST (Retail Sales Tax)
New Brunswick	15% HST		15%	Harmonized rate
Newfoundland & Labrador	15% HST		15%	Harmonized rate
Northwest Territories	5%	0%	5%	GST only
Nova Scotia	15% HST		15%	Harmonized rate
Nunavut	5%	0%	5%	GST only
Ontario	13% HST		13%	Harmonized rate
Prince Edward Island	15% HST		15%	Harmonized rate
Quebec	5%	9.975% QST	14.975%	QST administered separately
Saskatchewan	5%	6% PST	11%	PST on most goods
Yukon	5%	0%	5%	GST only

Provincial Groupings

GST-Only Provinces (5%)

Alberta Yukon Northwest Territories Nunavut

These jurisdictions have the lowest overall tax burden for custom apparel purchases at just 5%.

HST Provinces (13-15%)

Ontario (13%) New Brunswick (15%) Newfoundland (15%) Nova Scotia (15%) PEI (15%)

Harmonized provinces combine federal and provincial tax into a single rate, simplifying administration.

GST + PST Provinces

British Columbia (12%) Manitoba (12%) Saskatchewan (11%) Quebec (14.975%)

These provinces charge GST and PST separately. Quebec's QST is administered by Revenu Quebec.

BC Children's Clothing Exemption: British Columbia exempts children's clothing (sizes 15 and under, or XS-L for kids) from the 7% PST. However, the 5% GST still applies. If ordering youth sizes for schools or youth groups in BC, you may qualify for PST savings.

Business Purchases and Input Tax Credits

If you're a GST/HST registrant, you can recover the tax paid on business purchases through Input Tax Credits (ITCs). This effectively makes your custom apparel purchase tax-free for business use.

What Are Input Tax Credits?

ITCs allow registered businesses to claim back the GST/HST paid on purchases used for commercial activities. When you buy custom t-shirts for employee uniforms, promotional events, or resale, the GST/HST you pay can be recovered when you file your GST/HST return.

ITC Eligibility Requirements

Be registered for GST/HST - You must have a valid GST/HST account
Business purpose - Goods must be used for commercial activities
Valid documentation - Keep invoices showing GST/HST charged
Reasonable expense - Must be a legitimate business expense
Claim within deadline - Generally 4 years from the end of the reporting period

GST/HST Registration

You must register for GST/HST if your total taxable revenues exceed $30,000 in any single calendar quarter or in any four consecutive calendar quarters. Below this threshold, registration is voluntary.

Benefits of Voluntary Registration

Claim ITCs - Recover GST/HST on all business purchases
Professional appearance - Display a GST/HST number on invoices
Prepare for growth - Systems in place before you hit $30K threshold
Contract eligibility - Some contracts require GST/HST registration

Providing Your GST/HST Number: When placing orders, provide your 15-character Business Number (e.g., 123456789RT0001). The "RT" indicates GST/HST registration, followed by your account identifier. This allows us to verify your registration and ensures proper documentation.

Calculating Your ITC

For most purchases, you can claim 100% of the GST/HST paid. Example calculation:

Item	Amount
100 custom t-shirts @ $15 each	$1,500.00
Setup and screen printing	$150.00
Shipping	$75.00
Subtotal	$1,725.00
HST @ 13% (Ontario)	$224.25
Total Paid	$1,949.25
ITC Claimable	$224.25

CRA Compliance Warning: Claiming ITCs without proper documentation or for personal expenses is tax fraud. The CRA conducts audits and penalties can include repayment of ITCs plus interest and fines. Always keep detailed records and only claim legitimate business apparel expenses.

Non-Profit and Charity Considerations

Non-profit organizations and registered charities have specific rules regarding GST/HST on custom apparel purchases. Contrary to common belief, most non-profits are not automatically exempt.

What's Taxable for Non-Profits?

Custom apparel purchases - T-shirts, uniforms, promotional items
Merchandise for sale - Items sold at events, fundraisers, gift shops
Supplies and materials - Most operational purchases

What's Exempt?

Membership fees - If they don't provide a direct benefit
Donations - No GST/HST on charitable donations
Some exempt supplies - Specific categories like childcare, healthcare

Fundraising Sales: T-shirts and merchandise sold at charity events ARE taxable. You must collect GST/HST on sales even if the proceeds support a charitable cause. The taxability depends on the transaction type, not the organization's status.

Rebates for Charities and Non-Profits

While non-profits must pay GST/HST on purchases, certain organizations can recover a portion through rebates:

Organization Type	Federal Rebate	Provincial Rebate (HST)	Application
Registered Charities	50% of GST	Varies by province	Form GST66
Qualifying Non-Profits	50% of GST	Varies by province	Form GST66
Municipalities	100% of GST	Varies by province	Form GST66
Hospital Authorities	83% of GST	Varies by province	Form GST66

Provincial Rebate Rates (HST Provinces)

Ontario: 82% provincial portion for municipalities; 78% for hospitals; varies for charities
Nova Scotia: Similar structure with provincial variations
New Brunswick, Newfoundland, PEI: Specific rebate formulas apply

Rebate Applications: Rebates must be claimed separately from regular GST/HST returns using Form GST66 (Public Service Bodies' Rebate). Claims can be filed annually or semi-annually depending on your rebate period. Keep all invoices as supporting documentation.

School and Institution Purchases

Schools, universities, and educational institutions frequently order custom apparel for teams, clubs, events, and uniforms. Understanding the tax implications helps with budgeting and compliance.

Public Schools and School Boards

Public school boards are generally required to pay GST/HST upfront but can claim significant rebates:

Federal GST Rebate: 68% of GST paid
Provincial HST Rebate: Varies by province (often 68-93%)
Net effective rate: Significantly lower than standard rates

Private Schools

Private schools typically pay full GST/HST without rebate eligibility, unless they qualify as a registered charity (many do). If registered as a charity, the 50% federal rebate applies.

Universities and Colleges

Post-secondary institutions have specific rebate rates:

Universities: 67% federal GST rebate
Colleges: 67% federal GST rebate
Provincial portions: Vary by province

School Orders: When ordering for a school, check with your school's finance or business office about tax handling. Many schools have specific purchasing procedures and may have blanket exemption certificates or rebate processes already in place.

Student Groups and Clubs

Student-run organizations ordering custom apparel typically pay full GST/HST unless:

Orders are placed through the school's official purchasing department
The organization has its own charitable registration
The school provides tax-exempt status for student activities

Reseller Tax Considerations

If you're purchasing custom apparel to resell - whether for a merchandise line, team store, or promotional products business - you'll want to understand how to minimize tax impact and maintain compliance.

No Formal Resale Certificate in Canada

Unlike the United States, Canada does not have a formal "resale certificate" system that exempts purchases from sales tax at the point of sale. Instead, Canada uses the Input Tax Credit (ITC) system.

How Canadian Resellers Handle Tax:

Pay GST/HST on purchases from suppliers
Charge GST/HST on sales to customers
Claim ITCs to recover tax paid on purchases
Remit the difference (tax collected minus ITCs) to CRA

Your GST/HST Number as Evidence

Your GST/HST registration number serves as evidence that you're a registered business eligible to claim ITCs. When purchasing:

Provide your GST/HST number to suppliers
Ensure it appears on all invoices
Keep records showing purchases were for resale

Provincial PST Exemptions

Some provinces offer PST exemption certificates for purchases intended for resale:

Province	PST Exemption Available?	Certificate/Form
British Columbia	Yes - for goods for resale	PST Exemption Certificate (FIN 490)
Saskatchewan	Yes - Vendor's Licence holders	Provide Vendor's Licence number
Manitoba	Yes - for goods for resale	RST Registration number
Quebec	No direct exemption	ITR (Input Tax Refund) system like GST

Reseller Compliance: Using exemption certificates or claiming ITCs for personal purchases is tax fraud. The CRA and provincial tax authorities conduct audits. Ensure all items claimed as "for resale" are actually sold to customers with appropriate tax collected.

Record Keeping Requirements

Proper record keeping is essential for claiming ITCs and surviving a CRA audit. For custom apparel purchases, maintain detailed documentation of every transaction.

Required Invoice Information

To claim ITCs, your invoices must include:

Invoice Documentation Checklist

Supplier's legal name or operating name
Supplier's GST/HST registration number
Invoice date
Your business name (for amounts over $150)
Description of goods purchased
Total amount paid
GST/HST amount charged (or indication that tax is included)

Retention Periods

The CRA requires records to be kept for 6 years from the end of the last tax year to which they relate. For example, records for purchases made in 2024 must be kept until at least the end of 2030.

Acceptable Record Formats

Paper invoices: Original or legible copies
Digital records: PDFs, scans, or electronic invoices
Accounting software: Records maintained in QuickBooks, Xero, etc.
Email confirmations: If they contain required information

Digital Record Keeping: The CRA accepts electronic records if they're legible, complete, and can be provided on request. Consider using cloud accounting software that automatically stores invoices and categorizes GST/HST for easy reporting.

Organizing Apparel Purchase Records

For custom apparel orders specifically, keep records of:

Original quotes and order confirmations
Proof of payment (credit card statements, bank records)
Delivery receipts showing goods received
Any correspondence about the order
Photos of received merchandise (helpful for audit verification)

Audit Preparedness: In an audit, the CRA may request records within 30 days. Failure to provide adequate documentation can result in denial of ITCs, penalties, and interest. Organize records by year and type for quick retrieval.

2024-2025 GST/HST Holiday

The federal government introduced a temporary GST/HST relief period from December 14, 2024 to February 15, 2025. Here's how it affected custom apparel purchases.

December 14, 2024 - Start Date

GST/HST holiday began. Qualifying items became temporarily tax-exempt.

Holiday Period

Two months of reduced tax burden on select categories of goods.

February 15, 2025 - End Date

GST/HST holiday concluded. Normal tax rates resumed.

What Was Exempt?

Children's clothing: All children's apparel including t-shirts, hoodies, pants
Children's footwear: Shoes, boots, sneakers for kids
Children's diapers: Disposable and cloth diapers
Children's car seats: Safety seats for vehicles
Various other categories (toys, books, holiday items)

What Remained Taxable?

Adult Apparel: The GST/HST holiday did NOT apply to adult clothing. Custom t-shirts, hoodies, and other promotional apparel in adult sizes remained fully taxable at normal rates throughout the holiday period.

If you ordered custom youth apparel during this period (December 14, 2024 - February 15, 2025), you may have benefited from the temporary exemption. Contact us if you have questions about orders placed during this time.

Frequently Asked Questions

Yes, custom apparel including t-shirts, hoodies, and promotional merchandise is subject to GST/HST in Canada. The rate depends on your province: 5% GST in Alberta/territories, 13% HST in Ontario, 15% HST in Atlantic provinces, or GST plus provincial sales tax in BC, Manitoba, Saskatchewan, and Quebec.

Yes, if your business is registered for GST/HST, you can claim Input Tax Credits (ITCs) to recover the GST/HST paid on custom apparel used for business purposes. This includes employee uniforms, promotional merchandise, and items purchased for resale. Keep detailed invoices showing the GST/HST charged.

You must register for GST/HST if your total taxable revenues exceed $30,000 in any single calendar quarter or in any four consecutive calendar quarters. Even below this threshold, voluntary registration allows you to claim Input Tax Credits on your purchases.

Non-profit organizations generally must pay GST/HST on custom apparel purchases. However, registered charities can apply for a 50% federal GST rebate. Clothing sold at fundraising events remains taxable. Membership fees and donations are exempt, but merchandise sales are not.

Canada does not have a formal resale certificate system like the US. Instead, businesses use the Input Tax Credit (ITC) system to recover GST/HST paid on goods purchased for resale. Your GST/HST registration number serves as evidence of your status. Some provinces like BC offer Purchase Exemption Certificates for PST.

British Columbia exempts children's clothing (sizes 15 and under or extra-small to large for girls/boys) from PST. However, GST still applies. Most other provinces do not offer children's clothing exemptions for provincial sales taxes. During the 2024-2025 GST/HST holiday (Dec 14, 2024 - Feb 15, 2025), children's clothing was temporarily exempt from GST/HST.

Keep invoices showing the supplier's name, GST/HST registration number, invoice date, description of goods, total amount paid, and GST/HST charged. Records must be kept for 6 years from the end of the year to which they relate. Digital records are acceptable if they meet CRA requirements.

Public schools and school boards generally pay GST/HST upfront but can claim rebates. Public school boards can claim 68% of GST and applicable HST federal portion rebates. Private schools typically pay full GST/HST without rebate eligibility. Always consult your school's finance department for specific policies.

Provide your 9-digit GST/HST Business Number (BN) followed by 'RT' and a 4-digit account identifier (e.g., 123456789RT0001) when placing orders. This allows the supplier to verify your registration and helps with your ITC documentation. Request that your number appear on all invoices.

The federal government provided temporary GST/HST relief from December 14, 2024 to February 15, 2025 on select items. Children's clothing and footwear were exempt during this period. However, adult apparel remained fully taxable throughout the holiday period. Custom promotional merchandise for adults was not eligible for relief.

GST/HST Guide for Custom Apparel Purchases in Canada

Important Disclaimer