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Snack Foods, Beverages and Candies

Guide 501, September 2006

• The information in this Guide explains how Retail Sales Tax (RST) applies to snack foods, beverages and candies. Please note that this Guide replaces the previous version dated June 2001.

Snack Foods and Candies

RST applies to snack foods and candy when sold for 21¢ or more. Examples of taxable items include:

• candy coated or chocolate covered raisins
• chewing gum
• chocolate bars, jelly beans and other candies
• granola bars
• marshmallows
• potato chips, corn chips, pretzels and puffs, however flavoured
• popcorn (plain, salted, buttered or flavoured)
• salted or coated nuts and seeds.

Items such as breath mints and throat lozenges are also taxable. Antacid tablets and similar items are taxable unless sold on the prescription of a physician, dentist or veterinarian.

Note: Chocolate, sugar and honey sold for cooking purposes are not considered taxable snack foods or candy.

Ice Cream Products

Prepackaged

Prepackaged individual portions of ice cream, ice milk, sherbet, frozen yogurt, frozen custard, sundaes, ice cream bars and popsicles and similar products are taxable when sold individually or in packages containing more than one prepackaged individual portion. Ice cream, ice milk, sherbet, frozen yogurt or frozen custard sold in bulk sizes, such as one-half litre, litre, etc., are exempt from RST.

Hand-scooped

Ice cream, ice milk, sherbet, frozen yogurt or frozen custard that is hand-scooped or machine-dispensed and served in individual portions (for example, a cone, banana split, sundae, etc.) is a prepared food product. Prepared food products are taxable if the total transaction is more than $4.00, excluding the federal Goods and Services Tax (GST). RST does not apply if the total transaction is $4.00 or less (excluding GST). Since the federal government allows vendors the option of using GST-included pricing when billing customers, RST does not apply unless the GST-included price for prepared foods is more than $4.24 ($4.00 + 6 per cent GST).

Please note that, for the balance of this Guide, any reference to the $4.00 amount will exclude the 6 per cent GST.

Snack Cakes, Cookies and Pastries

Prepackaged

Prepackaged snack cakes, cookies or pastries are taxable except when sold by an eating establishment as part of a prepared meal for a total charge of $4.00 or less.

When more than one individually-wrapped portion is further prepackaged in a larger container by the manufacturer for sale as a unit, the sale of this larger unit is considered a sale of food products and is exempt from RST. As an example, cupcakes may be wrapped individually and placed in a container, such as a bag or box. The container may hold six or more individually-wrapped cupcakes. RST does not apply if the whole container of cupcakes is sold as a unit. If the cupcakes are sold individually, they are considered taxable snack cakes and do not qualify for exemption from RST, unless sold by an eating establishment. An individual portion is one that is intended for one person.

Baked Goods Sold By Bakeries

Bakeries selling beverages are considered to be operating an eating establishment. The sale of five or fewer pastries with a beverage or beverages is considered the sale of prepared foods and is taxable if the total charge is over $4.00. However, customers who buy more than five pastries, with or without beverages, are not required to pay RST on the baked goods. When six or more pastries are sold, the baked goods qualify for exemption as food products. For further details, please refer to RST Guide 500 - Food Products and RST Guide 300 - Prepared Foods.

Biscuits and Biscuit Wafers

Products prepackaged by manufacturers and specifically marketed as biscuits or biscuit wafers are exempt as food products. This includes products such as cream sandwiches, chocolate covered biscuits, milk chocolate biscuits, chocolate covered wafers, chocolate covered biscuit fingers and all similar items. Products prepackaged and specifically marketed to compete with chocolate bars are taxable.

Soft Drinks

Definition

Under the Retail Sales Tax Act, "soft drinks" mean "non-alcoholic beverages consisting of,

1. fruit juices, flavouring or sweetening, or any combination of them and carbonated water,

2. soda, sparkling water, mineral water and water but does not include soda, sparkling water, mineral water or water sold in bottles or other containers each containing in excess of one litre,

3. non-carbonated fruit juice beverages or fruit drinks containing less than 25 per cent by volume of a natural fruit juice or combination of natural fruit juices or a natural fruit juice or combination of natural fruits that have been reconstituted into the original state, ..."

Soft drinks are taxable whether they are sold by the bottle or other container or by the glass, and whether they are prepared at soda fountains or manufactured. A soft drink also includes preparations such as syrup, powder, etc., which, when added to water, produces a drink that falls within one of the above categories, i.e., (a), (b), or (c). As above, soda, sparkling water, mineral water and water, is only taxable when sold in containers holding one litre or less.

Soft drinks are not taxable when sold with prepared foods as part of one transaction for a total charge of $4.00 or less. When soft drinks are sold with prepared foods as part of one transaction and the total charge is more than $4.00, RST applies to the full amount of the transaction. Soft drinks are taxable when sold alone.

Low Alcohol Wine and Beer

RST applies to the sale of low alcohol wine and beer as follows:

• Low alcohol beer - soft drink: taxable at the RST rate of 8 per cent
• Low alcohol sparkling wine - soft drink: taxable at the RST rate of 8 per cent
• Low alcohol sparkling wine coolers - soft drink: taxable at the RST rate of 8 per cent
• Non-carbonated low alcohol wine - fruit juice: exempt from RST. If sold from an eating establishment for a total charge of more than $4.00, taxable at the rate of 8 per cent

If sold by an eating establishment, these drinks are not taxable when sold with prepared food products for a total charge of $4.00 or less.

Legislative References

Retail Sales Tax Act, subsection 7(1), clause 7(1)1(i)
Regulation 1013 under the Act, section 1

For Further Information

The information contained in this publication is only a guideline. For further information, please contact the nearest Ontario Ministry of Finance Tax Office listed under Taxes - Provincial (Retail) Sales Tax in the blue pages of your telephone directory, call our TAX FAX service at 1 877 4 TAX-FAX (1 877 482-9329), or visit our website at www.trd.fin.gov.on.ca.

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