Since Canada announced the GST/HST tax exemption in November, there has been some debate among Canadian restaurants, caterers and customers about which products qualify for the tax exemption.
Social media platforms are abuzz with questions from business owners and customers wondering whether the tax break applies to food service establishments, when it starts and whether it covers all alcoholic beverages.
Although the new legislation initially caused some confusion about what types of products are eligible, many restaurants are now a little more confident about how to handle the temporary tax break.
According to Machael Shaikh, general manager of Mildred's Temple Kitchen, the information they received from Restaurants Canada and the LCBO was clear and straightforward.
“There wasn’t much confusion for us,” Shaikh told blogTO. “We just had to check the documents.”
And to inform its customers about the tax break, the restaurant has even created “Good to Know” cards that will be placed at each table next to the QR code to help customers understand how the new changes apply impact their bills.
“Some customers didn’t even know there was a tax break,” Shaikh said, but added that people were excited about the prospect of saving money once they found out about the changes.
A spokesperson for the Drake Hotel echoed that sentiment, noting that only some guests had expressed interest in the legislation.
“It hasn’t posed any major challenges – most people are happy to use the savings,” the spokesman said.
If you're still unsure about the details of the tax break, here's everything you need to know about which products in restaurants, food establishments and food delivery apps are affected by the tax break.
GST/HST Interruption Overview
The federal government has passed legislation to implement a temporary GST/HST break on a variety of essential goods, which has been in effect since December 14 and will last until February 15, 2025.
The tax break applies to several product categories, including children's clothing and shoes, children's diapers, books, Christmas trees and other seasonal decorations, puzzles and most food and beverages.
Restaurants and food establishments
Much of the confusion in the new legislation concerns the rules for restaurants and food establishments.
Food and beverages (non-alcoholic and eligible alcoholic) are tax-free when served in restaurants, pubs, bars, food trucks and other establishments. So when you eat out, you shouldn't see any tax on your bill unless you order a specific type of cocktail or mixed drink.
There is no tax on beer, malt liquor, wine, cider, sake, or other beverages that contain 22.9 percent alcohol by volume (ABV) or less.
For example, a mimosa made with sparkling wine and orange juice would be suitable, while a sangria containing both wine and rum or a mixed drink such as vodka-soda would be out of the question, provided the rum or vodka has an alcohol content of 23% or more.
There is also no tax on liquor coolers and premixed alcoholic beverages with an alcohol content of seven percent or less.
So if you eat out at a restaurant in the next few months, you could still see a small amount of tax on your bill if you order a drink that doesn't meet the requirements.
Food delivery
It seems that delivery apps have caused some confusion, especially when ordering food and drinks through third-party platforms like Uber Eats or DoorDash.
If a restaurant charges a customer directly for delivery of a meal, no tax should be charged on the order. However, when a meal is ordered through a platform, two separate transactions take place.
Firstly, the food is provided by the restaurant to the customer, and secondly, the delivery service is provided by the platform provider to the customer.
This means that the meal provided by the restaurant to the customer is not taxed, but the delivery service provided by the platform is.
Catering services
In general, there should be no tax on catering services. To qualify, the catering service must include the provision, preparation, and serving of food, nonalcoholic beverages, or permitted alcoholic beverages.
Services to which taxes would continue to be added include event entrance fees, facility entertainment fees, fees for musicians, DJs or other entertainers, and cooking services where the food is prepared and served by a chef who supplies the ingredients for the However, meal will not be provided by them.