Unpacking Your Groceries: A Guide to GST/HST on Food in Canada
Ever wonder why some food items on your shopping receipt have tax applied, while others don't? In Canada, understanding the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) on groceries can be a bit like navigating a complex maze. The Canada Revenue Agency (CRA) provides detailed guidelines to help clarify what counts as a "basic grocery" and is therefore zero-rated (meaning 0% tax), and what is considered taxable. Knowing these distinctions can help you make more informed choices at the supermarket checkout.
The GST applies in most of Canada at a rate of 5%, while the HST applies in participating provinces (Ontario at 13%, and New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island at 15%). When we talk about "zero-rated," it means GST/HST is applied at 0%, whereas "taxable" means the regular 5%, 13%, or 15% rate applies.
What Are Basic Groceries?
Generally, the supply of basic groceries, which includes most food and beverages marketed for human consumption, is zero-rated. The CRA considers a product a "food" or "beverage" if an average consumer would recognise and purchase it as such to sustain life, allay hunger or thirst, or for enjoyment, rather than for therapeutic or preventative effects. Ingredients that add flavour, texture, or appearance to a final food or beverage product are also typically zero-rated.
Examples of common zero-rated basic groceries include:
Fresh, frozen, canned, and vacuum-sealed fruits and vegetables.
Breakfast cereals.
Most milk products.
Fresh meat, poultry, and fish.
Eggs.
Coffee beans.
Unpopped popcorn kernels.
Table salt, salt for curing fish, and pickling salt.
Traditional bread products such as bagels, English muffins, croissants, or bread rolls, provided they do not have sweetened fillings or coatings.
Plain bottled water sold in manufacturers' packages of two or more single-serving bottles, or in a bottle that exceeds a single serving.
Ice made from potable water (e.g., ice cubes or large blocks).
Meal replacement products and nutritional supplements that qualify under the Food and Drugs Act and Regulations are generally zero-rated, unless sold from a vending machine.
Pre-packaged lunch and snack combinations (e.g., those with separate compartments for crackers, cheese, and a dip) are generally zero-rated.
What Food Items Are Taxable?
While most basic groceries are zero-rated, there are specific categories of foodstuffs that are taxable. These exclusions often depend on the product's form, packaging, marketing, or how it is consumed.
Here are some key examples of taxable items and the nuances involved:
Alcoholic Beverages: Wines, spirits, beer, malt liquor, and other alcoholic beverages are taxable. Even de-alcoholized beer and wine are considered taxable. However, cooking wines, sold and represented as condiments, are zero-rated.
Carbonated Beverages: All carbonated beverages, including soft drinks, mixers (like tonic and soda water), non-alcoholic malt beverages, and carbonated water (even flavoured or naturally carbonated), are taxable.
Non-Carbonated Beverages (with exceptions): Non-carbonated fruit juice beverages or fruit-flavoured beverages that contain less than 25% by volume of natural fruit juice (or reconstituted natural fruit juice) are taxable. Syrups, crystals, and powders not fruit-flavoured for making beverages are zero-rated.
Single-Serving Beverages and Puddings: Beverages (other than unflavoured milk) and puddings (including flavoured gelatine, mousse, flavoured whipped dessert products) are taxable when sold as a single serving. A single serving is generally defined as under 600 mL for beverages or under 425 grams for puddings. This means a small bottle of plain water (under 600 mL) is taxable, but a larger bottle (over 600 mL) or a multi-pack of smaller bottles is zero-rated.
Candies and Confectionery: Candies, confectionery, chewing gum, chocolate, and items like fruits, seeds, nuts, or popcorn when coated or treated with candy, chocolate, honey, molasses, sugar, syrup, or artificial sweeteners, are taxable. However, baking ingredients like bulk industrial chocolate, chocolate chips, and baker's chocolate are zero-rated.
Bars: Nut bars, energy bars, and protein bars are generally taxable, unless they qualify as zero-rated meal replacements or nutritional supplements. Granola bars are also taxable. Cereal bars and muffin bars are taxable when sold individually, or in boxes containing less than six bars.
Snack Foods: Products such as chips, crisps, puffs, curls, sticks (e.g., potato chips, corn chips, cheese puffs), other similar snack foods, popped popcorn, and brittle pretzels are taxable. The CRA looks at various factors like ingredients (potatoes, corn), flavours (salty, barbecue), texture (crispy, crunchy), cooking process (fried, baked), size, shape, as well as how the product is labelled, packaged, and marketed (e.g., using words like "snack" or "crunch") to determine if it falls into this category. Salted nuts or salted seeds, and flavoured nuts or seeds (if salt is an ingredient), are also taxable. Snack mixtures, including trail mixes, that contain cereals, nuts, seeds, dried fruit, or other edible products (but not sold as breakfast cereal) are taxable.
Ice Lollies, Ice Cream, and Similar Products: Ice lollies, juice bars, flavoured/coloured/sweetened ice waters (frozen or not) are taxable. Ice cream, ice milk, sherbet, frozen yoghurt, or frozen pudding, and their non-dairy substitutes, are taxable when packaged or sold in single servings (less than 500 mL or 500 grams). Even a box containing multiple individually wrapped single servings is taxable.
Fruit-Based Snack Foods: Fruit bars, rolls, drops, or similar fruit-based snack foods (in solid or semi-liquid form), such as fruit leathers, are taxable.
Sweetened Baked Goods: Cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products, are taxable if they are pre-packaged for sale to consumers in quantities of less than six items each of which is a single serving, OR if they are not pre-packaged and sold as single servings in quantities of less than six. A single serving for these items is typically less than 230 grams. However, if a mixed supply of six or more single servings (e.g., two bagels, two muffins, two doughnuts) is sold and not individually pre-packaged, it can be zero-rated.
Heated Food or Beverages: Food or beverages that have been heated or kept hot for consumption (e.g., from a heated cabinet, hot take-out counter) are taxable.
Salads: The supply of salads is generally taxable, unless they are canned or vacuum-sealed. This includes fruit salads and gelatine salads. However, unmixed salad kits (e.g., separate lettuce, croutons, dressing) are zero-rated.
Sandwiches: Sandwiches and similar products (like hot dogs, hamburgers, open-faced sandwiches, wraps with prepared filling) are taxable, unless they are frozen.
Platters: Platters or arrangements of cheese, cold cuts, fruit, vegetables, or other prepared foods (like sushi or crudités) are taxable, regardless of whether they are frozen. These are typically presented on serving ware to create a visual effect and require little or no additional preparation.
Dispensed Beverages: Beverages dispensed at the place where they are sold (e.g., coffee, tea, hot chocolate, juice from a dispenser at a café) are taxable, regardless of size or temperature.
Catered Food and Beverages: Any food or beverages sold under a contract for, or in conjunction with, catering services are taxable. Catering involves supplying prepared meals or food/beverages, often delivered, and potentially arranged, heated, or served by the supplier.
Vending Machine Sales: Most food and beverages sold through a vending machine are taxable. An exception applies if the item is sold for a single coin of 25 cents or less.
Sales in Certain Establishments: Food or beverages sold at establishments where 90% or more of their sales are of taxable food or beverages (such as restaurants, fast food outlets, cafeterias, or mobile canteens) are taxable.
Dietary Supplements: Products commonly referred to as dietary supplements are taxable . These are consumed for therapeutic or preventative effects, or to enhance performance or physique, and are not considered basic groceries . This includes many vitamins, minerals, tonics, fibre, protein, and herbal supplements . If a product is supplied in pill, tablet, or capsule form, it's generally taxable as it's not considered a food, beverage, or ingredient. The CRA determines if something is a dietary supplement based on its labelling (e.g., "dietary supplement" identification, health claims, warnings, recommended dosages, Drug Identification Numbers (DINs) or Natural Product Numbers (NPNs)), packaging (e.g., dropper bottles, gels in tubes), and marketing (e.g., advertised for beneficial effects, sold in specialty nutrition centres).
When in Doubt, Ask!
The rules surrounding GST/HST on basic groceries can be quite detailed, and factors like labelling, packaging, and marketing can play a significant role in determining a product's tax status. If you encounter a product whose tax status is unclear, or if you have a specific situation that isn't fully addressed by these guidelines, the CRA offers services to provide clarification.
Understanding these distinctions can help you better manage your household budget and ensure you're paying the correct amount of tax.
Do you have questions about specific grocery items or a unique food business situation?
Don't hesitate to seek expert advice!
For additional information or to request a ruling, you may contact the CRA's GST/HST Rulings directly.
If you're in Canada and have a specific GST/HST technical enquiry, you can call GST/HST Rulings at 1-800-959-8287. If you are located in Quebec, you may call Revenu Québec at 1-800-567-4692.
