Nunavut charges only 5% GST with no territorial tax. Northern Residents Deductions and higher CRA mileage rates help offset the high cost of living in Canada's newest territory.
How your business purchases are taxed at the register.
Nunavut, Canada's newest and largest territory, charges only the federal 5% GST with no territorial sales tax. Every cent of GST paid on business purchases is fully recoverable through Input Tax Credits.
Nunavut's extreme geography and climate create unique challenges for self-employed workers. The territory has no road connections to southern Canada — all goods arrive by sealift (summer) or air cargo (year-round). This dramatically increases the cost of materials, equipment, and supplies. While the costs are higher, the GST on all purchases (including freight) is recoverable, and all expenses are deductible on T2125.
The Northern Residents Deduction is particularly valuable in Nunavut, as all communities are in the prescribed northern zone (Zone A), qualifying for the maximum residency deduction. Combined with the GST-only tax structure, self-employed workers in Nunavut benefit from meaningful tax advantages that partially offset the extreme cost of living.
See exactly how taxes break down on common business purchases in Nunavut.
Nunavut
Office supplies may cost more due to air freight, but the tax rate is only 5% GST, fully recoverable. The elevated shipping cost itself is also deductible.
Nunavut
Many Nunavut businesses order bulk supplies via annual sealift. The $250 GST is recoverable, and the entire order is deductible as a business expense.
Your Input Tax Credit (ITC) filing roadmap.
Keep receipts with GST/HST registration numbers
Match each expense to a T2125 line item
Claim ITCs on your GST/HST return
Nunavut's 5% GST is fully recoverable through Input Tax Credits on your CRA GST return. There is no territorial tax. Claim ITCs on all business categories including telephone and utilities and business use of home. Also claim the Northern Residents Deduction (Form T2222) on your personal return — all Nunavut communities qualify for Zone A (maximum residency deduction).
3 advantages, 1 things to watch
Every community in Nunavut qualifies for the prescribed northern zone (Zone A), providing the maximum Northern Residents Deduction — up to $22/day ($8,030/year) for the residency component alone.
Form T2222, Zone A listCRA-prescribed automobile rates are higher for territorial residents. Where applicable (communities with roads), this means larger deductions per business kilometre.
CRA Automobile Allowance RatesThe cost of shipping materials to Nunavut (via sealift or air cargo) is a deductible business expense. The 5% GST on freight charges is recoverable. These costs can be significant but are fully recognized by the CRA.
Nunavut has limited access to in-person banking, accounting, and legal services. Many self-employed workers use southern-based service providers, which may charge based on their province's tax rules. Verify the correct tax is applied on out-of-territory professional services.
See profession-specific tax guides for self-employed workers in Nunavut.
Official government and support links for Nunavut self-employed workers.
Start scanning now — your first 15 scans are free, no credit card required.
$250,000+ in receipts already processed by Canadian businesses