Newfoundland and Labrador’s Sugar Sweetened Beverage Tax (SSBT) took effect on September 1, 2022. Announced as part of the province’s 2021 budget, implementation of the SSBT was delayed from an original target date of April 1, 2022.
SSBT applies at a rate of $0.20 per litre, prorated based on the volume of a taxable beverage in a container, regardless of the sugar concentration. HST applies to the total price of a taxable beverage, including any SSBT.
Taxable Products
Tax is payable by any person who, as a consumer, acquires a beverage sweetened by sugar at a retail sale in Newfoundland and Labrador or imports such a beverage into the province. “Sugar sweetened” refers to products that have sugar listed as an ingredient on the label or container. For these purposes, “sugar” includes fructose, glucose, sucrose, honey, molasses, agave syrup, corn syrup, and similar sweetening agents, but not artificial sweeteners.
SSBT applies to ready-to-drink beverages (including those dispensed at the point of sale) to which sugar has been added by the manufacturer, including soft drinks and sweetened fruit juice, iced tea, lemonade, and sports or energy drinks. Tax also applies to concentrated drink mixtures to which the manufacturer has added sugar, including frozen concentrates and flavoured drink crystals, powders, or syrups.
In cases where the manufacturer of a drink mixture has not provided enough information (i.e., preparation directions) to determine the finished beverage volume, SSBT applies at the following rates:
- $0.80 per litre of frozen concentrated juice;
- $2.00 per kilogram of flavoured powder; and
- $1.20 per litre of syrup.
Non-Taxable Products and Exemptions
Natural fruit and vegetable juices (must be 100% natural), sugar-free soda, and concentrates intended to be used primarily as cooking or food preparation ingredients or additives are not subject to SSBT. In addition, sugar added to an otherwise exempt beverage at the time of purchase in a food or beverage establishment (e.g., in a restaurant) will not render the drink taxable.
Chocolate milk (excluding milkshakes), unflavoured plant-based milk alternatives (e.g., soy and almond beverages), yogurt drinks, alcoholic beverages, and medical or therapeutic beverages are exempt from SSBT. An exemption is also in place for ready-to-drink beverages packaged in a container with a volume of less than 75 millilitres.
While imports are generally subject to SSBT, consumers may bring limited quantities of otherwise taxable products into the province exempt from tax. The quantity limits (not to be exceeded) under these exemptions are five litres for ready-to-drink or dispensed beverages, one litre for frozen concentrated juices or syrups, and 500 grams for flavoured powders.
Exports are also not subject to SSBT, which can give rise to a refund claim where tax is paid by a retailer in respect of beverages manufactured in Newfoundland and Labrador and later shipped outside of the province.
Compliance Obligations
The province has structured the SSBT like many other excise taxes, such that tax is generally collected at the wholesale level. However, retailers are required to remit SSBT when subject beverages are purchased from unregistered wholesalers or vendors located outside of the province.
The expectation is that retailers will adjust the price of sugar sweetened beverages to reflect the additional cost of SSBT charged to them by suppliers; however, there is no requirement to separately disclose SSBT on invoices to consumers.
Wholesalers supplying taxable beverages in Newfoundland and Labrador are required to register for and collect SSBT from retailers and consumers, where applicable, at the time of sale. No tax is required to be collected on transactions between registrants. SSBT returns are filed monthly, and registrants must meet certain documentary requirements to support taxable and exempt sales, exports, refunds, and the self-assessment of tax on products for their own use.
Technically, consumers are also obligated to self-assess and remit SSBT on taxable purchases exceeding exemption limits from unregistered wholesalers and retailers located outside the province, but that requirement might prove difficult to enforce.
Further details on the application of the SSBT can be found on the province’s Sugar Sweetened Beverage Tax page and in the Sugar Sweetened Beverage Tax Information Circular issued earlier this year.
If you have any questions or concerns about how Newfoundland and Labrador’s SSBT might impact your organization, please contact the Ryan TaxDirect® line at 1.800.667.1600 or taxdirect@ryan.com.