News and Insights

Ontario Retail Sales Tax Guide 302, “Alcoholic Beverages”

Tax Development Mar 10, 2009

The province of Ontario has recently revised this guide to clarify that a brew pub is a licensed establishment that manufactures draught beer for onsite consumption. Tax applies on these sales at a rate of 10 percent. Brew pubs may qualify as a manufacturer if they produce more than $5,000 of beer in a year. Qualifying brew pub operations may purchase production equipment, consumables and raw materials used directly in the brew pub operation exempt of Ontario Retail Sales Tax (ORST).

In addition, Ferment on Premise (FOP) establishments must be licensed and are not considered manufacturers, but provide a non-taxable service to their customers for the use of their facilities and equipment. FOP licensees are required to charge 8 percent ORST on all supplies (i.e., bottles, caps, labels, cleaning materials) and taxable ingredients (i.e., brewers malt, malt extract, hops) provided to their customers. In addition, they must collect the flat tax of 13 cents per litre on all beer and/or wine produced.

Liquor delivery services provided by a person who holds a liquor delivery service license are the provision of non-taxable services. Corkage fees charged by a restaurant for opening bottles of wine brought into the restaurant by the customer are also considered non-taxable services.

ON Guide 302