6 Taxes To Know If You Run A Restaurant In Canada
Stay updated with current accounting standards, business compliance, tax preparation tips, and latest news.
31 May 2023
You’ve started a restaurant out of love for food. Amazing!
Since it’s a for-profit business, you’ve also learnt the basics of restaurant bookkeeping. Excellent!
Even though the quality of service drives restaurants towards success, understanding the industry-specific taxes is the real thing that keeps their financial health in check. In this case, we mean all the taxes a restaurant establishment must bear if it conducts business in Canada.
If you own a restaurant or planning to open one, it is necessary for you to understand these 6 taxes that will be levied on your business income.
Read this guide on restaurant taxes and sail through the upcoming tax season easily!
In Canada, the law differentiates between food items prepared at a restaurant and food items brought at a grocery store. Cooked meals are taxed, and each province has a different rate. Also, all the items in a vending machine are taxed, even if they are otherwise zero-rated basic grocery items.
If your restaurant serves alcohol or has a brewery/ winery attached to it, the business is subjected to this tax. The tax amount varies as per the type, percentage, and volume of the alcohol. Whether it was locally brewed or imported also plays a role in determining the tax rate.
Recently, there was an adjustment to the excise duty rates on spirits, wines, and beer. Consult corporate tax filing Surrey Canada services to adjust your business strategy accordingly!
Restaurants are a labour-intensive industry, and payroll taxes matter significantly in this field. Before issuing a salary, the employer has to make standard payroll deductions: Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax from employees’ wages.
To get a better understanding of payroll deductions, it is advised to schedule an appointment with restaurant bookkeeping services in Canada.
Non Alcoholic drinks, such as carbonated drinks, non-carbonated beverages (juice, milk, etc), and everything else sold in a restaurant for consumption is subject to tax. Whether you own a restaurant, fast-food outlet, cafeteria, or coffee shop, you need to pay a tax on all non-alcoholic beverages.
Check out the publication listed by CRA about the taxation of beverages in vending machines and different establishments for more information.
Food Tax
In Canada, the law differentiates between food items prepared at a restaurant and food items brought at a grocery store. Cooked meals are taxed, and each province has a different rate. Also, all the items in a vending machine are taxed, even if they are otherwise zero-rated basic grocery items.
Spirits, Wine, Beer Tax (Alcohol Tax)
If your restaurant serves alcohol or has a brewery/ winery attached to it, the business is subjected to this tax. The tax amount varies as per the type, percentage, and volume of the alcohol. Whether it was locally brewed or imported also plays a role in determining the tax rate.
Recently, there was an adjustment to the excise duty rates on spirits, wines, and beer. Consult corporate tax filing Surrey Canada services to adjust your business strategy accordingly!
Payroll Taxes
Restaurants are a labour-intensive industry, and payroll taxes matter significantly in this field. Before issuing a salary, the employer has to make standard payroll deductions: Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax from employees’ wages.
To get a better understanding of payroll deductions, it is advised to schedule an appointment with restaurant bookkeeping services in Canada.
Non-alcoholic Beverage Tax
Non Alcoholic drinks, such as carbonated drinks, non-carbonated beverages (juice, milk, etc), and everything else sold in a restaurant for consumption is subject to tax. Whether you own a restaurant, fast-food outlet, cafeteria, or coffee shop, you need to pay a tax on all non-alcoholic beverages.
Check out the publication listed by CRA about the taxation of beverages in vending machines and different establishments for more information.
