The short answer is you're tax exempt if the tax laws say you are. There are a bunch of specific exemptions based on who you are, what you're buying and why.
Taking British Columbia as an example. One exemption is supplies for business use:
Some exemptions are only available to certain purchasers in certain circumstances. These exemptions include:
- Goods purchased solely for resale or lease
- Software or telecommunication services purchased solely for resale
- Goods or software purchased to be incorporated into goods for resale
You can also claim an exemption if you are buying "adult size" clothing for a child under 15 years.
Farmers are exempt from sales tax on various goods and services.
First Nations individuals are exempt in some circumstances.
And so on and so on.