ZERO-RATED OR TAXABLE FOOD & DRINKS?
GST: FINE TECHNICAL LINE BETWEEN ZERO-RATED & TAXABLE FOR FOOD & DRINKS
The supplies of food and beverages that are for human consumption are generally zero-rated for GST/HST purposes in Canada – meaning that a 0% rate of tax applies! There are exceptions, however, particularly where the food or beverage falls into one of the specific exclusions set out in Part III of Schedule VI to the Excise Tax Act (“ETA”). This set of rules generally reflects Canada's intention that most food and drink products are free of GST, with the exceptions being fairly limited in scope.
Regrettably, recent Tax Court of Canada (“TCC”) jurisprudence may be applying a more restrictive approach and have been more willing to deny zero-rated treatment based on a threshold inquiry into whether the product qualifies as “food” or “beverage” in the first place. This is a marked change from earlier jurisprudence.