The impact that the new Provincial Sales Tax (“PST”) in British Columbia will have on the restaurant industry, effective April 1, 2013, has been summarized in Notice 2012-017, “Notice to the Restaurant Industry”, released by the province this month. Essentially, restaurants and eating establishments that sell liquor or other taxable goods must register for the PST. If liquor or taxable goods are not sold by these businesses, registration is not required.
Typical items provided by restaurants and eating establishments that would be subject to the PST are as follows:
- Beer, wine, spirits;
- Liqueurs, ciders and coolers;
- Mixed drinks; and
- Any beverage with an alcohol content greater than 1%.
Sales that would be exempt from the PST are as follows:
- Meals and other prepared foods;
- Snack foods (e.g., chips, nuts and candy); and
- Non-alcoholic hot or cold beverages.
Goods and services that would be subject to the PST when supplied to restaurants and eating establishment include:
- New or used goods acquired for use in businesses, such as tables, chairs, appliances, dishes, cleaning supplies and menus;
- Alcohol or other goods purchased and given away for free or at a reduced cost; and
- Computer hardware and software (unless custom software).
Finally, goods and services not subject to the PST when supplied to restaurants and eating establishments include the following:
- Refundable deposits;
- Cleaning services;
- Goods purchased for resale or lease to customers; and Liquor incorporated into food for resale (e.g., liquor used in preparing meals and baked goods, such as cooking wine)