B.C. Soda Tax Examples
Examples of PST application on sodas
This article will cover some common scenarios that can be encountered when the PST is applied to soda beverages in British Columbia, and a brief overview of the required configuration.
British Columbia "Soda Tax" recap
Here is a quick recap of British Columbia's Provincial Sales Tax (PST) rules which applies to soda beverages. For complete and up-to-date documentation regarding taxes, please consult the official British Columbia government site at https://www2.gov.bc.ca/gov/content/taxes/sales-taxes.
PST applies to all retail sales of soda beverages at a rate of 7%.
If you offer the beverage for sale without the food or other good, you charge PST on the lesser of:
the ordinary purchase price of that beverage, and;
the total purchase price of the other good and beverage together.
Or
If you offer the beverage for sale only with the food or other good, the lesser of:
50% of the total purchase price of the food or other good and beverage together, and;
$3
Also, don't forget that almost all items sold in restaurants, including soft drinks, are also taxable by the federal Goods and Services Tax (GST) at a rate of 5%
IMPORTANT! While the new regulations are often referred to as "B.C. Soda Tax", it is important to understand that the government of British Columbia did not create a new tax specifically for sodas. Instead, the updated law simply extends the reach of the existing Provincial Sales Tax to soda beverages.
For your POS system, this means that you should not have a separate tax for sodas. You should use the PST at a rate of 7%.
Example #1
You offer an all-you-can-eat buffet with access to a soda fountain for $30.00. Access to the soda fountain is not sold separately and it is not listed on the menu, therefore it does not have its own price. The $3.00 / 50% rule applies: Since $3.00 is lesser than 50% of $30.00 ($15.00), the PST will be calculated on $3.00.
Configuration for Example #1
Configure a regular item called "Buffet - Adult" with a price of $30.00.
Assign the GST and PST as taxes for this item, and enable the exception option on the PST.
Example #2
You offer an all-you-can-eat buffet for $28.00. You offer access to a soda fountain for an additional $2.00, or the customer can use the water fountain, which is free. Because access to the soda fountain is listed separately on the menu, the PST is calculated on the sale price of $2.00 for this item.
Configuration for Example #2
Configure a Regular item called "Buffet - Adult" with a price of $28.00. Assign only the GST tax on this item.
Configure a Regular item called "Soda Fountain" with a price of $2.00. Assign both the GST and PST on this item.
Configure a Regular or Included item called "Water" with a price of $0.00. Don't assign any tax on this item (since it's free).
Link the Buffet - Adult item to the Soda Fountain and water items through a Forced Remark.
This will allow the server to select between "Soda Fountain" (pst-taxable) and "Water" (non-pst-taxable).
Example #3
You sell a hot-dog and large soda combo for $5.00. The soda is not listed on the menu and not sold on its own. The $3.00 / 50% rule applies: Because 50% of $5.00 ($2.50) is lesser than $3.00, the BC Soda Tax will be calculated on $2.50.
Configuration for Example #3
Configure a Regular item called "Hot-Dog + Soda Combo" with a price of $5.00.
Assign both the GST and PST on this item, and enable the exception option on the PST.
Configure a Modifier or Included item called "Soda - Included". Set the item's price to $0.00 and make this item part of a Soda/Soft Drink item screen.
Link the Hot-Dog + Soda Combo item to the Soda - Included item through a Forced Remark.
Example #4
You sell a hot-dog and large soda combo for $5.00. The Hot-Dog on its own is $3.25 and the drink on its own is $2.25, which are both listed on the menu. In this instance, the BC Soda Tax will be calculated on the ordinary sale price of the soda, which is $2.25.
Configuration for Example #4
Configure all your soft drinks as Regular items, in a "Soft Drinks" item screen. Give them a price of $2.25 each. Assign both the GST and PST on these items.
Configure a Regular item called "Hot-Dog + Soda Combo" with a price of $5.00. Assign only the GST tax on this item.
Configure an Included Item called "Large Soda Included" with a price on $0.00. Assign both the GST and PST on this item.
To make sure to use the regular price of the soft drink for tax calculation, select a regular soft drink for PST in the Taxable amount item column.
Link the Hot-Dog + Soda Combo item to the Large Soda Included item through a Forced Remark.
Example #5
You sell a hot-dog and large soda combo for $5.00. The Hot-Dog on its own is $3.25 and the drink is $2.25, which are both listed on the menu. You have a special promotion which gives 75% off hot-dog combos that day, which brings the total price of the combo down to $1.25. In this instance, the PST will be calculated on the total price of the combo, which is now $1.25.
Configuration for Example #5
Use the same configuration as Example #4.
Create a 75% Off promotion which will apply on the Hot-Dog combo.
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