Zero-rated and exempt supplies both mean no GST/HST is charged, but they affect input tax credits differently. Here’s the distinction.
A zero-rated supply is taxable at 0% GST/HST. No tax is collected, but a registrant may generally claim input tax credits on eligible purchases used to make the supply.
An exempt supply is not subject to GST/HST. A registrant does not charge GST/HST and generally cannot claim input tax credits for purchases used to make exempt supplies.
Looks like you are visiting from outside Canada. Switch to InvoiceCast.com for the best US InvoiceCast experience.