Thirteen percent HST on most lines, 18% gratuity on food and bar at most venues, and service charges that are not gratuity. The lesson that saves clients from the most painful invoice surprise.
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HST, gratuities and service charges in Ontario.
Thirteen percent HST on most lines, 18 percent gratuity on food and bar at most venues, and service charges that are not gratuity.
The lesson that saves clients from the most painful invoice surprise.
Three different charges.
HST, 13 percent in Ontario. Applies to almost every event good and service: venue rental, catering, bar, entertainment, rentals, AV, photography, your fee.
A tip to service staff, usually 15 to 20 percent on food and bar. At hotels and banquet halls it is often automatic at 18 percent.
Grossing up.
Quote times 1.18 (gratuity on food and beverage lines only) times 1.13 (HST).
A 20,000 dollars catering-and-bar quote becomes 23,600 dollars with gratuity, then 26,668 dollars with HST.
A gross-up table you can keep on the wall.
Reading a venue price sheet.
"Packages from 135 dollars per person" means plus service charge and plus tax.
"135 dollars all-in" means the opposite.
Questions to ask the venue, in writing.
Is the per-person price before service charge and HST?
What is the service charge percentage, and is it applied to food, bar, room rental, AV, or all of them?
That is the lesson. The worksheet and the quiz are just below this video.
What you will be able to do
- Gross up any quote with HST and gratuity
- Tell gratuity from a service charge
- Read a venue price sheet correctly
Three different charges
- HST, 13 percent in Ontario. Applies to almost every event good and service: venue rental, catering, bar, entertainment, rentals, AV, photography, your fee. Exceptions are rare (some registered charity situations; marriage licences, which carry no HST). Vendors quote before HST by habit.
- Gratuity. A tip to service staff, usually 15–20 percent on food and bar. At hotels and banquet halls it is often automatic at 18 percent.
- Service charge. A percentage the venue adds that may or may not reach the staff, and which is itself taxable. Ask two questions: “Is the service charge a gratuity?” and “Is HST charged on it?” The answers decide whether your guests’ tips are already paid.
Grossing up
Quote × 1.18 (gratuity on F&B lines only) × 1.13 (HST). A $20,000 catering-and-bar quote becomes $23,600 with gratuity, then $26,668 with HST. For non-F&B lines, quote × 1.13 only.
A gross-up table you can keep on the wall
| Quote type | Multiply by | Example: $10,000 quote becomes |
|---|---|---|
| F&B at a venue with 18 percent service charge, HST on the total | 1.18 × 1.13 = 1.3334 | $13,334 |
| F&B with a 15 percent gratuity that is not taxed (confirm in writing; rare) | 1.13 then add 15 percent of the pre-tax amount | $12,800 |
| Any non-F&B line (entertainment, AV, rentals, photo, your fee) | 1.13 | $11,300 |
| A quote marked “all-in” | 1.00, after you confirm what “all-in” includes | $10,000 |
| Marriage licence (Toronto fee $180; confirm current) | 1.00; no HST | n/a |
Reading a venue price sheet
“Packages from $135 per person++” means plus service charge and plus tax. “$135 all-in” means the opposite. Confirm in writing, and put the all-in figure on your budget sheet. The budget sheet has columns for each.
Questions to ask the venue, in writing
- Is the per-person price before service charge and HST?
- What is the service charge percentage, and is it applied to food, bar, room rental, AV, or all of them?
- Is the service charge a gratuity distributed to staff? If not, is a separate gratuity expected?
- Is HST charged on the service charge? (In practice, almost always yes.)
- Does the F&B minimum have to be met before or after service charge and HST?
- Are bartender fees, cake-cutting fees, corkage, coat check and dance-floor fees subject to the service charge?
- If we tip staff directly on the night, is that in addition to the service charge?
Put the answers in the budget sheet’s comments column and keep the email. On the night, the banquet captain may not know what the sales office promised.
Tipping on top of a service charge
Clients ask whether they should tip the banquet staff when an 18 percent service charge is already on the invoice. The honest answer depends on the venue’s answer to the gratuity question. If the service charge reaches staff, a further tip is a gift, not an obligation. If the venue keeps it, a cash tip for the captain and the bartenders is customary in the GTA and should be a line on the budget sheet and an envelope in the day-of kit, in our experience a few hundred dollars for a 200-guest dinner. Either way, tell the client before the night so nobody is handing out cash on an impulse.
HST and your own business
Once your revenue passes $30,000 in four consecutive calendar quarters you must register for HST, charge it on your fee, and remit it. Input tax credits let you recover HST you pay on business purchases. An accountant who knows small service businesses is worth a morning of your time.
Two practical notes. If you contract vendors on the client’s behalf and pay them from your own account, the HST on those invoices flows through your books; agree with your accountant whether you are acting as agent (the client’s HST, passed through) or as principal (your HST, charged on the full amount). And if the client is a registered charity, it may be able to recover a share of the HST it pays; that is the charity’s question for its own accountant, but a budget sheet that shows HST separately on every line makes the claim possible.
Worked example
The Harbour Gala hotel sheet reads “$95 per person plated, 18 percent service charge, HST applicable”. Per person all-in: $95 × 1.18 = $112.10, × 1.13 = $126.67. For 200 covers that is $25,334, not the $19,000 a committee member wrote on the whiteboard.
The written answers from the hotel: the service charge applies to food and bar and to the room rental, but not to the AV inclusions; it is not distributed as a gratuity, so a cash tip for the captain and four bartenders goes on the sheet as a $400 line in the day-of kit; HST is charged on the service charge; and the $18,000 minimum is measured before service charge and HST, which is why the all-in floor is about $24,000. The bar is a separate consumption line capped at a pre-tax figure, grossed up by the same 1.3334. When the development officer later prepares the foundation’s HST recovery claim, the budget sheet gives her the tax on each line without a second pass through the invoices.
Common mistakes
- Writing the per-plate price on the whiteboard and multiplying by heads. Fix: gross up first, then multiply.
- Applying gratuity to AV, décor and your fee. Fix: gratuity on food and bar only; HST on everything.
- Assuming the service charge is a tip. Fix: ask; budget a cash tip if it is not.
- Comparing a “++” venue with an “all-in” venue on the sticker price. Fix: convert both to all-in before the proposal.
- Forgetting HST on your own fee after you register. Fix: it is on every quote from the day of registration.
Worksheet
Download the worksheet, complete it for your own event (or the running gala example), and keep it in your course binder. It takes about 12 minutes.
Check your understanding
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