Gross margin is revenue minus the direct cost of goods or services sold, expressed as a dollar amount or a percentage, showing how much is left to cover overhead and profit.
Gross margin (or gross profit) isolates the profitability of what you sell before overhead. Revenue minus cost of goods sold, the direct costs of producing or delivering, leaves the gross margin. As a percentage it shows how many cents of each sales dollar remain to cover rent, salaries, marketing and profit.
Gross margin is one of the most diagnostic numbers a business owner watches. A falling margin signals rising input costs or underpricing before it ever shows up in net profit, and comparing margins across products or services reveals which lines actually make money.
A shop sells $100,000 of product that cost $60,000 to buy. Gross margin is $40,000, or 40%. That 40 cents on each dollar must cover all overhead and still leave a profit.
Our certified accounting firm handles this for businesses and individuals across Canada, at fixed fees with no surprises.
Book a Free 15-Minute CallGross Margin Frequently Asked Questions
Common questions regarding our compliance workflows and service guarantees.
Gross Margin: The Questions People Search
The questions Canadians actually search on this topic, answered plainly. Browse every question in the Canadian tax answers directory.
Canada runs three systems. The federal GST is 5% for 2026 and applies nationally. Five participating provinces fold a provincial share into one harmonised rate: 13% in Ontario, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 14% in Nova Scotia since 1 April 2025. Others add their own tax to the 5% GST, giving 12% in British Columbia and Manitoba, 11% in Saskatchewan and 14.975% in Quebec. Alberta and the territories charge 5% only.
EI benefits are taxable income. Service Canada withholds income tax before each payment reaches you, and the total benefits plus the tax withheld appear on your T4E for the year. That withholding follows a basic calculation rather than your full marginal rate, so people who also worked during the year often end up with a balance owing at filing. Asking Service Canada to withhold more, or setting money aside yourself, avoids a surprise. Higher-income claimants can also have to repay part of their regular benefits through the return.
Non-taxable income is money you receive that never enters taxable income. Common examples are lottery and most gambling winnings, gifts and inheritances, growth and withdrawals inside a TFSA, the GST/HST credit and Canada child benefit, most life insurance death benefits, and child support under current-rule agreements. A few amounts are reported and then deducted, such as workers' compensation and social assistance, because they still affect benefit calculations, so report anything that arrives on a slip even when no tax results.
The participating provinces that use the HST are Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Quebec charges the federal GST plus its own QST, administered by Revenu Quebec. British Columbia, Saskatchewan and Manitoba charge the federal tax plus a separate provincial sales tax. Alberta and the territories charge the federal tax only. The tax you bill follows the place of supply, not the province your business operates from.
Related Terms
Related Services
Reviewed and fact-checked by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
Start in two minutes
Tell us what needs filing and we quote a fixed fee
Personal, corporate, sales tax, payroll or bookkeeping: describe it below and you get a fixed price to approve before anything starts.
- Fixed fee agreed before work starts
- Pay after the service
- Free 15-minute consultation
24/7 Helpline: +1 (416) 619-0068
Secure Fixed Quote
Fill details below to lock in pricing and get started today.
Our Partners Are Alumni of the World's Top Accounting and Tax Institutions
