Snack Foods, Beverages and Candies

• This Guide provides tax information to help vendors and consumers understand how Retail Sales Tax (RST) applies to snack foods, beverages and candies.
• For general RST information that applies to all businesses such as registration for vendor permits, general exemptions, and how to charge and collect tax, see Small Business Pointer 901 – The Basics of Retail Sales Tax.

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.

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 (for example, one-half litre, litre) 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) 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.

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 Retail Sales Tax (RST).

For 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 for $4.00 or less as prepared foods.

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 more information on how RST applies to the sale of food products and prepared foods, see 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

Soft drinks are taxable when sold alone, by bottle, glass or other container, and whether they are prepared at soda fountains or manufactured. Soft drinks mean non-alcoholic beverages consisting of:

• fruit juices, flavouring or sweetening, or any combination of them and carbonated water,
• soda, sparkling water, mineral water and water sold in bottles or other containers, each containing less than one litre,
• non-carbonated fruit juice beverages or fruit drinks containing less than 25 per cent by volume of a natural fruit juice.

A soft drink also includes preparations such as syrup or powder, which when added to water produces a drink that falls within one of the above categories.

Soft Drinks Sold with Prepared Foods

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, Retail Sales Tax (RST) applies to the full amount of the transaction.

More Information

Telephone

• 1 866 ONT-TAXS (1 866 668-8297)
• Teletypewriter (TTY) 1 800 263-7776

Written Interpretation

To obtain a written interpretation on a specific situation not addressed in this publication, please send your request in writing to:

Ministry of Revenue
Tax Advisory Services Branch
Retail Sales Tax Section
33 King Street West, 3rd Floor
Oshawa ON L1H 8H5

Disclaimer and References

The information contained in this publication is provided only as a guideline and is not intended to replace the legislation.

Legislative References

• Retail Sales Tax Act, paragraph 7(1)1
• Regulation 1012 under the Act, section 1
• Regulation 1013 under the Act, section 1