Returnable containers and goods
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Returnable containers and goods
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Returnable beverage containers
There is no GST/HST on deposits for returnable beverage containers that are refundable to consumers.
When you buy from a bottler or manufacturer that sells beverages in sealed returnable containers, GST/HST is not charged on the refundable deposit. When you sell the beverages in the sealed containers to your customer, you do not charge GST/HST on the refundable deposit.
When you accept used and empty containers from customers, no part of the refund to the consumer is a refund of tax. Therefore, you do not claim an input tax credit (ITC) for that refund. When you return used containers to a depot or a bottler, there is no GST/HST charged on the refund you receive.
Example
You sell a beverage in a returnable container with a fully refundable deposit.
You collect and remit the tax on the non-refundable amounts when you sell beverages. Therefore, you claim ITCs for the tax on the non-refundable amounts when you purchase beverages, except if you are located in a participating province. For more information, see HST and returnable beverage containers.
In some provinces, some non-refundable amounts such as environmental levies and recycling fees are charged separately in addition to the refundable deposit. For more information, see Levies and returnable beverage containers.
Certain registrants, such as take-out establishments that provide eating areas on their premises, may charge tax on the refundable deposit. If you are such a registrant and you do not charge tax on the refundable deposit, you will have to pay an amount equal to the tax on the refundable deposit when you collect the empty containers from your premises and redeem them for the refunds.
HST and returnable beverage containers
You collect and remit the tax on the non-refundable amounts when you sell beverages. Therefore, you claim input tax credits (ITCs) for the tax on the non-refundable amounts when you purchase beverages, except if you are located in a participating province.
On April 1, 2013, Prince Edward Island harmonized its provincial sales tax with the GST to implement the HST. Also, as of April 1, 2013, the HST at the rate of 12% (5% federal part and 7% provincial part) no longer applies in British Columbia. The HST at the rate of 12% has been replaced by the GST at the rate of 5% and a provincial sales tax.
Special rules apply in New Brunswick, Newfoundland and Labrador, and Nova Scotia where the deposits include tax, and only part of the deposit on certain beverage containers is refundable. A bottler or manufacturer sells the beverages to you and charges the deposit. The bottler or manufacturer sends us the HST included in the deposit. You do not claim an ITC for the HST included in the deposit. When you sell the beverages and containers to your customer, you remit the HST on the sale of the beverage and the HST included in the non-refundable part of the deposit.
Example
You are a retailer in Newfoundland and Labrador. You sell a beverage in a returnable container to a consumer and charge a deposit, half of which is refundable.
Some registrants, such as take out establishments that provide eating areas on their premises, may charge tax on the refundable deposit. If you are such a registrant, and you do not charge tax on the refundable deposit, you have to pay an amount equal to the tax on the refundable deposit when you collect the empty containers from your premises and redeem them for the refunds.
Levies on returnable beverage containers
In some provinces, only a part of the deposit is refundable to the consumer. Some non-refundable amounts, such as environmental levies and recycling fees, are charged separately in addition to the refundable deposit. In these cases, you exclude the GST/HST from the amount of the deposit that is refundable to the consumer.
The non-refundable amounts are subject to the GST/HST at the same rate as the beverage.
Example
You are a retailer in a non-participating province. You sell a beverage in a returnable container, with a fully refundable deposit and non-refundable recycling fee (for example, from a retailer to a consumer).
Returnable containers
GST/HST generally applies to empty returnable containers. However, we consider usual packaging or containers (other than returnable beverage containers) to be part of the goods they cover or contain. Therefore, the tax applies on the same basis as the goods the containers hold. For example, containers filled with medical oxygen are zero-rated (0%).
When a customer returns a container that held goods, you can treat the transaction in one of two ways, depending on the terms of the original agreement:
- a sale by the customer to you (the original supplier); or
- a refund you pay to the customer.
If the return of the container is treated as a sale, the customer, if a registrant, charges you GST/HST on the return of the container. You can claim an input tax credit for the GST/HST payable on the purchase of the container.
If the return is treated as a refund, you have to issue a credit note to the customer or, alternatively, the customer has to give you a debit note. In that case, see Returned goods.
Returned goods
If you give customers a refund or credit for all or part of an amount they paid or were charged for goods they return, you may adjust, refund, or credit the customer the GST/HST you first charged or collected on these goods. If you do this, you have to issue a credit note to the customer, or have the customer issue a debit note to you.
Be sure the following information is included on the credit or debit note:
- a statement or other indication that the document is a credit or debit note;
- your business or trading name, or the name of your intermediary, and your Business Number (BN), or the BN of the intermediary;
- the customer's name or trading name, or the name of the customer's authorized agent or representative; and
either
- the amount of the adjustment, refund, or credit for tax; or
- a statement that the total amount for which the note is issued includes the adjustment, refund, or credit of tax, the tax rate (GST or HST) that applies to each taxable supply for which tax is reduced, and either the total amount and tax reduced for all the supplies to which the same tax rate applies or the total amount and tax reduced for each supply.
You can deduct the amount of GST/HST adjusted, refunded, or credited in determining your net tax for the reporting period in which you issued the credit note or received the debit note, as long as that amount was previously included in your net tax. In turn, if your customer claimed an input tax credit (ITC),he or she will add that amount in calculating his or her net tax. If your customer claimed a rebate, he or she will repay that amount.
You have four years from the end of the reporting period during which you reduced the purchase price to make the adjustment, refund, or credit.
If you refund only a certain percentage of the purchase price (for example, 85%) and keep the balance as a restocking charge, you will refund only that percentage of the GST/HST you first collected. You issue a credit note, or the customer issues a debit note, for the amount of GST/HST you refund.
If you and the customer are GST/HST registrants, you can choose not to refund or credit the customer the GST/HST that was previously paid. You may wish to forgo the GST/HST refund if you have already remitted the tax and the customer has already claimed an ITC. In this case, you simply refund the amount without including the GST/HST that the customer first paid. You and your customer do not have to make any adjustments on your GST/HST returns.
Forms and publications
- GST/HST Technical Information Bulletin B-089, Returnable Containers
- GST/HST Technical Information Bulletin B-038, Returnable Containers Other than Beverage Containers
- Date modified:
- 2016-07-07