Returnable Containers

Deposits on beverage containers

Generally, deposits on beverage containers are not GST/HST- or QST-taxable. For more information, refer to the Canada Revenue Agency's GST/HST technical information bulletin B-089, Returnable Containers, at Canada.ca.

Deposits on other returnable containers

Other returnable containers or packages, such as oil drums and helium or oxygen cylinders, are generally considered to be part of the property they contain, and the taxes apply to the container or package in the same way as they do to its contents.

The sale of a container filled with medical oxygen is zero-rated, because the sale of medical oxygen is zero-rated; if sold empty, the sale of such a container is subject to 5% GST and 9.975% QST.

End of note

If a container or package is returned to the supplier, it can be treated in one of two ways:

First option

The purchaser of the container or package is deemed to have resold it to the original supplier. If the purchaser is a registrant, the purchaser must collect GST/HST and QST from the supplier. If the supplier is a registrant, it can claim an input tax credit (ITC) and an input tax refund (ITR) for the taxes paid on repurchasing the container or package.

Second option

The amount paid by the supplier on the return of the container or package is treated as a refund made by the supplier to the purchaser.

The supplier credits or refunds the purchaser for the GST/HST and QST previously paid and provides a credit or debit note. In addition, the supplier can deduct the GST/HST and QST amounts credited or refunded in the calculation of the supplier's net tax for the period in which the note was provided. The purchaser must include those amounts in its net tax.

The supplier and purchaser can choose not to follow the refund rules listed above. In such a case, the supplier must refund the deposit paid on the package or container to the purchaser. However, the supplier does not have to refund the GST/HST and QST paid at the time of purchase if both the supplier and purchaser are registrants and remitted the GST/HST and QST to us or claimed an ITC and ITR for the GST/HST and QST paid.

Where property is sold in a container or package other than the one it is usually sold in, and the package or container is sold with the property as a single item, the following rules apply:

If the package or container can be considered incidental to the property, the GST and QST apply to the sale of the package or container if the taxes apply to the contents (except if the contents are zero-rated).
If the package or container cannot be considered incidental to the property, it is subject to to the taxes separately from its contents. In this case, the taxes must be collected on the portion of the sale price that pertains to the package or container.