Sales tax on restaurant food is one of those things every Canadian owner has to get right, and almost nobody enjoys thinking about. This is a plain-language overview of how it generally works — it's not a substitute for advice from an accountant or the CRA, since rates and rules can change and your specific situation may have exceptions worth confirming directly.
GST vs. HST: the basic split
Canada has a federal Goods and Services Tax (GST). Some provinces combine it with their provincial sales tax into a single Harmonized Sales Tax (HST), charged as one line. Others keep GST and a separate provincial tax apart on the receipt, and a few charge GST only, with no provincial sales tax at all. Broadly, across the country:
- HST provinces (one combined rate): Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island.
- GST + separate provincial tax: British Columbia, Saskatchewan, Manitoba, and Quebec (GST + QST, shown as two lines).
- GST only: Alberta, Yukon, Northwest Territories, Nunavut.
Exact percentages shift from time to time, so always confirm current rates on the CRA website or with your accountant before configuring anything in your POS — don't rely on a blog post, or last year's receipt, for the live number.
Does it matter if it's dine-in, takeaway, or delivery?
Generally, prepared food sold by a restaurant is taxable regardless of whether it's eaten in-house, taken away, or delivered — this is different from the "basic groceries" exemption that applies to certain unprepared grocery items sold at a grocery store. Where it gets more nuanced is around specific categories, like cold prepared food sold below a certain price threshold in some contexts, or catering arrangements with different billing structures. These are exactly the kind of edge cases worth confirming with an accountant rather than guessing or assuming your neighbour's café does it the same way you do.
The practical takeaway for most full-service and quick-service restaurants: if you're serving prepared meals, tax almost always applies, and the order type — dine-in versus takeaway versus delivery — usually doesn't change that fact, even if it changes other things like whether a delivery platform's own fees get taxed separately.
What changes if you operate in more than one province
This is where a lot of POS systems fall short, because it's the part that only shows up once a business actually grows. If you run one location in Ontario and open a second in Alberta, you're not just changing a number in a settings screen — you're switching from a single HST line to a GST-only calculation, with different receipt formatting expectations for each. Your point of sale needs to handle this per outlet, independently, not as a single global setting that applies everywhere at once.
If you're planning to expand across provincial lines, ask your POS vendor directly: "If I open a location in a different province, can I set that outlet's tax rate independently, without touching or affecting my other locations' settings?" If they hesitate, or the answer involves contacting support to make the change manually every time, that's worth knowing before you sign a contract — not after your grand opening.
Common mistakes worth avoiding
Leaving the default rate unchanged after opening a new location
It's an easy thing to miss during a hectic new-location launch — the tax rate quietly carries over from your first outlet's settings because nobody thought to check. Always verify the configured rate before your first sale at a new location, not after your first month-end reconciliation flags a discrepancy.
Not itemizing tax clearly on receipts
Customers, and your own bookkeeping, benefit from a receipt that clearly separates the pre-tax subtotal, the tax amount, and the total, rather than a single bundled figure. It also makes reconciling your sales reports against what you actually remit far less error-prone at filing time, especially if you're ever asked to produce records for an audit.
Manually recalculating tax for discounts and promotions
When a discount, coupon, or a Buy-X-Get-Y offer is applied, tax needs to be calculated on the post-discount amount, consistently, every single time. Doing this by hand — or worse, applying the discount after tax instead of before — invites mistakes that compound over hundreds of transactions a week. It should be handled automatically by whatever's running your till, with no manual intervention required.
Assuming your delivery platform handles tax correctly on your behalf
If you sell through a third-party delivery app in addition to your own POS, don't assume their tax handling matches what your own system calculates. Periodically cross-check a sample order to confirm the numbers line up — discrepancies here are common and easy to miss until they've accumulated over months.
What to look for in your POS setup
- Tax rate configurable per outlet, not just once globally across your whole business
- Automatic recalculation when discounts or offers are applied, with no manual override needed
- Clean, itemized receipts showing subtotal, tax, and total as clearly separated lines
- Sales reports that break out tax collected separately from revenue, so reconciling at filing time is a lookup, not a recalculation
A note on record-keeping
Beyond getting the calculation right at the till, keep in mind that the CRA generally expects businesses to retain sales records for a number of years. A POS that keeps clean, exportable historical reports — not just live dashboards that reset — makes this a non-issue rather than a scramble the one time you actually need three-year-old data.
FizzyPOS lets you configure tax rates independently for every outlet, with automatic recalculation across discounts and offers, and itemized reporting built in from day one. Book a demo and we'll show you exactly how it's set up, with your own numbers.
This article is general information, not tax advice. Confirm current rates and rules for your specific situation with the CRA or a qualified accountant.