BC Ferries says it charges the harmonized sales tax on bananas – something that's normally considered produce – because of federal tax rules that specifically allows vessels to charge the extra tax.

A viewer contacted Steele on Your Side after being charged HST on a banana she bought on board a BC Ferries boat. She asked how the corporation could charge the combined tax on something that's normally exempt.

A BC Ferries spokesperson told us that under federal tax law its onboard cafeterias and restaurants are considered establishments where most of the food (90 per cent) is eaten immediately.

And because bananas are sold in that context, and are meant to be eaten right away, it's subject to GST, or in B.C., the HST.

"Federal tax laws dictate that foods that are sold for immediate consumption are taxable when sold at an establishment where essentially all food/beverage is taxable," the spokesperson said in an email to CTV News.

"Food purchased at an onboard cafeteria/restaurant is prepared and offered to be consumed in that facility and all other products are also already taxable."

There are other examples of this tax rule in other industries.

For example, under Canadian tax rules, the sale of pickled eggs, dill pickles or bread sticks are not normally considered taxable items – but if they're sold in a form suitable for immediate consumption in a pub where other prepared food and drink are sold, the items are taxable.

However, if the pub sells any of the items in a sealed jar, they are no longer considered food to be eaten immediately and are considered zero-rated basic groceries under the Canadian Revenue Agency's rules.

Here are more establishments that provide prepared food where sales of taxable food and drink constitute all or substantially all of their sales, and are thus subject to HST:

  • eat-in restaurants and drive-in restaurants;
  • fast food outlets or "quick service" outlets;
  • take-out and home delivery outlets;
  • pubs, taverns, bars, and lounges;
  • cafeterias and dining rooms;
  • lunch counters, coffee shops, and snack bars;
  • mobile canteens;
  • catering services;
  • hotels, motels, and lodging houses;
  • private and social clubs and similar places or establishments where prepared food products are provided;
  • convention centres;
  • sports arenas and stadiums;
  • meeting halls and union halls;
  • Royal Canadian Legion halls;
  • passenger transportation vehicles wherein food or beverages are provided for consideration, excluding incidences where all the food or beverages are provided for no consideration other than the consideration paid for the transportation service; and
  • any eating facility within an entity, such as a lunch counter within a retail department store.

Every Friday Lynda Steele dips into the viewer mailbag and answers a handful of viewer questions. Tonight, why garbage collectors aren't allowed to be outside your house before daylight...