Tax & Trade Blog

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NEWFOUNDLAND SUGAR TAX UPDATE

PROVINCE AMENDS REGULATIONS EFFECTIVELY ELIMINATING SSBT

We have previously blogged about the enactment of Newfoundland and Labrador’s (“Newfoundland”) Sugar Sweetened Beverage Tax (“SSBT”) in late 2022 here, and provided an update on the SSBT’s interaction with the collection of GST/HST here.  In just a period of three years, Newfoundland has switched course and recently chosen to effectively eliminate the SSBT through an amendment to the Revenue Administration Regulations (the “Regulations”).

As we blogged about here, in late 2022, Newfoundland and Labrador introduced a tax on sugar sweetened beverages (the “SSBT”).  An often-overlooked aspect of Canadian indirect and excise taxes is the ability for certain taxes to compound, so that one pays a “tax on a tax”.  This issue is particularly pronounced when supplies are subject to both GST/HST and a provincial excise tax.

A recent issue of the CRA Excise and GST/HST News clarified that the GST/HST is calculated on the total value of consideration including the SSBT and serves as an example of why it is important to consider how taxes interact in practice.