Which groceries are zero-rated in Canada?

Basic groceries such as fresh, frozen and canned fruit and vegetables, breakfast cereal, most milk products, fresh meat, poultry and fish, eggs and coffee beans. Pop, candy, chips, single-serve water under 600 mL, heated food and vending-machine sales are taxable.

Can I claim GST/HST on purchases if I only sell zero-rated groceries?

Yes. Zero-rated sales are taxable at 0%, so if you're registered you can claim input tax credits on what you buy to make them. Exempt sales are different: no input tax credits.

Is the quick method good for a store?

It can be. Resellers whose goods for resale cost at least 40% of revenue use a lower rate. Zero-rated sales are left out. Run the numbers both ways before you elect.

Can I use Spark Books for a retail store?

Only if you don't need to track stock. Spark Books has no inventory. Most stores do need it, and should pick software that has it.

Bookkeeping for retail stores in Canada

Retail books turn on stock. What you buy to resell is cost of sales, but only the part you've sold. What's still on the shelf at year-end is inventory. If you sell food, some of it is zero-rated and some isn't, and your till has to know which.

Where the money goes in your books

What a retail business usually spends on, and the account in a Canadian chart of accounts it belongs in. The numbers are the account codes in Spark’s starting chart.

Typical costs and the account each goes to
What you pay for	Account
Stock bought for resale	5000 Purchases and materialsAdjusted at year-end for what's still on the shelf.
Card processing fees	6310 Bank fees
Store rent	6700 Rent
Shipping to online customers	7100 Shipping and delivery
E-commerce platform and POS subscriptions	6520 Software and subscriptions
Ads and marketplace promotion	6000 Advertising and marketing
Shelving, counters and fixtures	1500 Equipment and furnitureAn asset, not an expense.

How a chart of accounts works · The whole chart, as a template

The tax rules that are different for you

Each one is from the CRA, checked in October 2026. The link goes to the page it came from.

Basic groceries are zero-rated, with exceptions

Fresh, frozen and canned fruit and vegetables, cereal, most milk products, fresh meat, fish, eggs and coffee beans are zero-rated: you charge 0% and can still claim the GST/HST you paid on your costs. Taxable: pop, candy and chocolate, chips, plain water in a bottle under 600 mL, heated food and anything sold from a vending machine.

CRA: GST/HST Memorandum 4-3, basic groceries

The quick method has a lower rate for resellers

If the goods you bought for resale last year cost at least 40% of your revenue, you use the lower quick-method rate: in Ontario, 4.4% of your HST-included sales rather than 8.8%. Zero-rated sales, like basic groceries, are left out of the calculation. You can only use the quick method if your taxable sales, including tax, are $400,000 or less.

CRA: RC4058, the quick method

Records to keep

POS reports that split sales by tax type: taxable, zero-rated and exempt.
Supplier invoices for every stock purchase.
A stock count at year-end. Your accountant needs it to work out what you actually sold.
Your card processor and marketplace payout statements, showing fees and refunds.

Common mistakes

One tax setting for the whole grocery aisle. Chips and pop are taxable; bread and milk aren't.
Expensing all stock when it's bought and never counting what's left.
Recording marketplace payouts as sales, after the platform has taken its fees.

How Spark Books handles it

Not a fit

Not the right tool if you carry stock you need to count and cost.

What it does

Sorts rent, fees, shipping and supplier payments, with the GST/HST split out.
Separates zero-rated, taxable and exempt sales on your GST/HST return figures, and leaves zero-rated sales out under the quick method.

What it doesn’t

No inventory. Spark Books has no stock counts, no cost per item and no inventory account. If stock matters to your margins, pick software that tracks it.
No POS or marketplace connection. Sales come in from your bank statements.
No live bank feed: you upload statements. Not available in Quebec yet.

Free, with no card. If you’d rather not do it yourself, a Spark bookkeeper keeps your books for $350 a month. How Spark Books works

Questions

Which groceries are zero-rated in Canada?: Basic groceries such as fresh, frozen and canned fruit and vegetables, breakfast cereal, most milk products, fresh meat, poultry and fish, eggs and coffee beans. Pop, candy, chips, single-serve water under 600 mL, heated food and vending-machine sales are taxable.
Can I claim GST/HST on purchases if I only sell zero-rated groceries?: Yes. Zero-rated sales are taxable at 0%, so if you're registered you can claim input tax credits on what you buy to make them. Exempt sales are different: no input tax credits.
Is the quick method good for a store?: It can be. Resellers whose goods for resale cost at least 40% of revenue use a lower rate. Zero-rated sales are left out. Run the numbers both ways before you elect.
Can I use Spark Books for a retail store?: Only if you don't need to track stock. Spark Books has no inventory. Most stores do need it, and should pick software that has it.

Start your books today

Free, with no card. Upload a few months of statements and see them sorted.

Start your books