Ever since Canada announced the GST/HST tax break holiday in November, there’s been some discussion among Canadian restaurants, caterers, and customers about which products are eligible under the tax holiday.
Social media platforms are sprinkled with questions from business owners and customers alike, who are wondering whether the tax break applies to catering companies, when it starts, and whether it covers all alcoholic beverages.
Although the new legislation may have caused some initial confusion about what types of products are eligible, many restaurants are now feeling a bit more confident about how to navigate 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 on our end,” Shaikh told blogTO. “We just had to review the documents.”
And to notify their customers about the tax break, the restaurant even created “good-to-know” cards placed at each table next to the QR code to help customers understand how the new changes will affect their bills.
“Some customers didn’t even know there was a tax break,” Shaikh said, although he added that people were excited about the prospect of saving money once they learned about the changes.
A spokesperson at the Drake Hotel also echoed this sentiment, noting that only some guests have expressed curiosity about the legislation.
“It hasn’t caused major challenges — most are happy to take advantage of the savings,” the spokesperson said.
With that being said, if you’re still unsure about the details of the tax break, here’s everything you need to know about what products the tax relief covers at restaurants, food establishments, and food delivery apps.
Overview of GST/HST Break
The federal government passed legislation to implement a temporary GST/HST break for a wide range of everyday essentials that has been in effect since Dec. 14 and will last until Feb. 15, 2025.
The tax break applies to several categories of products, including children’s clothing and footwear, children’s diapers, books, Christmas trees and other seasonal decorations, jigsaw puzzles, and most food and beverages.
Restaurants and Food Establishments
Much of the new legislation’s confusion involves the rules pertaining to restaurants and food establishments.
Food and drinks (non-alcoholic and eligible alcoholic ones) are tax-exempt when they are served at restaurants, pubs, bars, food trucks, and other establishments. So, when you dine out, you should see no tax on your bill unless you order a certain type of cocktail or mixed drink.
There is no tax on beer, malt liquor, wine, cider, sake or other beverages that contain alcohol that is 22.9 per cent alcohol by volume (ABV) or less.
For example, a mimosa made of sparkling wine and orange juice would qualify, while a sangria that includes both wine and rum or a mixed drink such as a vodka soda, would not qualify assuming the rum or vodka is 23 proof or greater.
There’s also no tax on spirit coolers and premixed alcoholic beverages that are seven per cent ABV or less.
So, if you’re eating out a restaurant over the next couple of months you could still see a small amount of tax on your bill if you happen to order a drink that doesn’t qualify.
Food delivery
It seems that delivery apps have created some confusion, especially when food and beverages are ordered through third-party platforms like Uber Eats or DoorDash.
When a restaurant bills a customer directly for the delivery of a meal, there should be no tax on the order. However, when a meal is ordered through a platform, two separate transactions occur.
First, the meal is provided by the restaurant to the customer, and two, 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 taxed.
Catering services
In general, there should be no tax on catering services. The catering service must be for the provision, preparation, and serving of food, non-alcoholic beverages, or eligible alcoholic beverages to qualify.
Services that would still have taxes added include event admission charges, facilities hosting fees, fees for musicians, DJs, or other entertainers, and chef services where the food is prepared and served by a chef, but the ingredients to make the meal are not provided by them.
