Three tax answers for one menu
Window sales are the easy case: prepared food and drink sold ready to eat is taxable at 13%. The wrinkles start immediately. Sweetened baked goods sold in quantities of six or more to take away are zero-rated as basic groceries, so a boxed dozen tarts from a dessert truck leaves the window with no tax on it while the single tart beside it carries 13%. And Ontario rebates its 8% share on qualifying prepared food and beverages sold for a total of $4.00 or less, so a small order under that line should ring through at 5% only, credited automatically at the register.
None of this works if the POS does not know the rules. We map the tax tables in Square item by item, because a season of the wrong default is expensive in either direction: charge 13% on a zero-rated dozen and you have overcharged customers; miss the tax on single servings and the HST return quietly builds a liability the bank balance does not know about.
Catering flips the switch
Food supplied under a contract for catering is excluded from zero-rating, full stop. The dozen tarts that left the window tax-free become taxable at 13% when you deliver them, set them out and serve them at an office lunch, because the customer is now buying a catering service, not groceries. A mandatory service charge on the catering invoice is part of the price and taxable too; a voluntary tip the client adds is not.
| Sale | HST treatment |
|---|---|
| Taco plate at a festival window | Taxable at 13% — prepared food for immediate consumption. |
| Dozen butter tarts boxed to go | Zero-rated — sweetened baked goods in a quantity of six or more. |
| Same dozen delivered and set up for an office lunch | Taxable at 13% — food under a catering contract loses zero-rating. |
| Coffee and a snack totalling $4.00 or less | 5% only — Ontario rebates its 8% share at the point of sale. |
| Mandatory 18% service charge on a catering invoice | Taxable at 13% — it is part of the catering price. |
| Voluntary tip added by the client | No HST. |
Trucks that run both sides of the business need invoices and POS categories that keep window and contract revenue apart, because the CRA reads a catering invoice against these rules exactly this way.
Registration, ITCs and the quick method question
The $30,000 small-supplier threshold, measured over four consecutive calendar quarters, disappears fast at festival volumes; most trucks cross it in their first real season and should usually register before launch anyway. Registration is not just an obligation here, it is money: 13% input tax credits on commissary rent, fuel, propane, truck repairs, packaging and equipment add up in a business whose inputs are almost all taxable.
- Fuel and truck costs generate ITCs in full when the vehicle is a commercial food truck used for the business, with the logbook to show it.
- Festival vendor fees charged by organizers normally carry HST — claim it, and keep the invoice, not just the e-transfer record.
- The quick method can suit a small operation with modest input costs, but a truck with heavy commissary rent and fuel often does better claiming actual ITCs. We run the math both ways before electing anything.
The returns behind the window
Incorporated trucks file a T2, and we prepare it through Corporate Tax Filing from books that already separate window, event and catering revenue, so the HST return, the income statement and the Square reports all tell one story. Sole proprietors report on the T2125 inside a personal return, where the season's profit meets instalments and RRSP room, and where a first losing season is at least deductible against other income.
Because food is a cash-adjacent, POS-driven business, CRA reviews tend to start from the sales records. Filing from reconciled Square data is the quiet defence: every deposit traced, every tax code deliberate. If a review letter does come, CPA Quick Support at $99/mo includes CRA letter review for exactly this kind of solo-operator moment, and full examinations move to our CRA Audit & Review Support.
