At the “point of sale” purchasing prepared food in Ontario constitutes an 8% PST rebate toward the 13% HST if the subtotal is $4.00 or under.
In short; Ontarian’s and guests to our province pay only 5% tax in Ontario on coffee and food totalling $4.00 and under. Whether eat in or take out.
Reducing tax paid on prepared food and eligible beverages can increase a coffee business’ bottom line. How? Let’s explain.
Most of us only look at the “final price paid” on our receipts for a single coffee at the register (including tax). So let’s set our final price including tax to $1.50 for a coffee.
A single coffee taxed properly should be $1.43 (higher – selling price) + 5% (7¢ HST) payable = $1.50
Compare: taxing that coffee at 13% HST without implementing the Ontario Food Tax rebate of 8%. Keeping the final total including tax to $1.50.
Single coffee priced at $1.33 (lower – selling price) + 13% (17¢ HST) = $1.50
As you see setting up your POS correctly nets your business an extra 10¢ every coffee sold at $1.50 (tax included). You can collect and remit the higher tax or you can adjust your own selling price, apply the Ontario 8% rebate and keep the extra revenue. It’s all above board; your choice.
For more information please visit the following link to Canadian Revenue Agency.
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