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GST/HST & Newfoundland Sugar Tax

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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.

SSBT Background

The SSBT was imposed on September 1, 2022, in Newfoundland and Labrador, applying to three categories of goods which contain sugar, namely: (1) ready-to-drink beverages; (2) dispensed beverages; and (3) concentrated drink mixtures.  For the purposes of the tax the amount of sugar in the product is irrelevant, and “sugar” is defined to include traditional sugar, fructose, glucose, honey, molasses, and corn syrup among other sweeteners.  The tax is levied at between $0.20 per litre and $2.00 per kilogram depending on the product.  Like other provincial excise taxes (i.e., tobacco taxes, fuel taxes), wholesalers of products caught in this regime are empowered as collectors and have to register for and collect/remit the tax.

Application of GST/HST on top of SSBT

A fundamental question for wholesalers is how the SSBT interacts with GST/HST, and more specifically, does a wholesaler have to charge GST/HST on the SSBT they are charging. 

At a basic level, every recipient of a taxable supply (that is not  zero-rated) in Canada must pay GST/HST on the value of the “consideration” for the supply.  For most supplies, this will simply be the purchase price — so a $10 purchase in Ontario generally results in $1.30 in GST/HST payable ($10 x 13% GST/HST rate in Ontario).

Eagle-eyed tax practitioners will note that “consideration” for a supply is both defined under the Excise Tax Act (“ETA”) as including “any amount that is payable for a supply by operation of law”.  Furthermore, section 154 of the ETA provides that, among other things, that taxes, fees, and duties imposed by a provincial government (defined as “provincial levies”) that are payable by a recipient of a supply (in respect of the consumption or use of property or a service) are to be included in the value of the consideration unless they are specifically excluded by the operation of the Taxes, Duties and Fees (GST/HST) Regulations.

As of the date of this blog, this list of prescribed provincial levies includes various provincial land transfer tax statutes, certain tourism and alcohol levies, and a general exempting provision for certain provincial “general sales” taxes.  Notably, the SSBT’s enabling statute is absent, meaning that SSBT on a product will form part of the supply’s “consideration” for GST/HST purposes. 

This creates a “tax on tax” situation where GST/HST is imposed on top of the amounts owing in respect of the supply and the SSBT.  So, a $10 product subject to a $2 SSBT charge will result in $1.80 of GST/HST payable ($12 x 15% GST/HST rate in Newfoundland and Labrador).


The SSBT illustrates the complicated interplay between provincial and federal taxes on goods and services.  It is also not the only example of a “tax on a tax”, with certain Motor Vehicles in British Columbia also subject to a similar situation.  Businesses in industries subject to taxation by multiple levels of government should seek expert advice to understand their obligations!

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