Are You Paying More For Smaller Products? What To Know About 'Shrinkflation' & 'Snack Tax'

The cost of groceries and inflation continue to impact Canadians and their wallets, and you may be considering buying products in smaller amounts to save money.

However, Canadian consumers are being warned that smaller food quantities may actually cost more, as smaller amounts are subject to tax.

On March 25, Dr. Sylvain Charlebois — director of the Agri-Food Analytics Lab at Dalhousie University — shared a video on Twitter on the topic.

In the clip, he uses the example of items like ice cream tubs to explain how some items are suddenly taxable because the labelled quantity is considered a "snack."

"Hey folks, be on the shrinkflation lookout," he says. "If a recipient is under 500ml, you will pay taxes," he continues.

This “snack tax” is not new, although you may have noticed your favourite products suddenly cost more.

While the tax regulations have been in place since 2006, many manufacturers have recently reduced the size of their products, presumably in response to inflation, and items that were previously tax-free may now be considered snack-size — and are taxed accordingly.

Charlebois' video, which has amassed over 350,000 views so far, has many others chiming in on the topic.

"On a similar vein – unsalted peanuts are not taxable. If they are salted, now they are a snack... therefore taxable. It makes me shake my head," one Twitter user said, to which Charlebois replied, "very true."

"[I] was wondering why I noticed sometimes I pay tax on certain foods and don't pay on some, and just couldn't figure it out. This makes sense," another stated.

However, as Charlebois points out, there are exemptions to this "snack tax," including on breakfast cereals and chocolate milk.

If you're wondering how it all works, basic groceries in Canada are not taxed, although certain categories — such as carbonated beverages, candies, confectionery and snack foods — are taxable.

And a product may just be deemed a snack food if the quantity dips below a certain amount, as specified by the CRA.

For example, in the case of ice cream, a tub is taxable when packaged or sold as a single serving, defined by the CRA as being under 500 grams or less than 500 millilitres. However, the same ice cream won't be taxed if it's beyond that size since it's considered a grocery item.

So, if you were to buy the same brand and flavour of ice cream, you may or may not be taxed depending on the size you purchase.

Ice cream isn't the only item that's subject to tax if sold below a certain quantity, either.

According to the CRA, certain baked goods, like cakes, muffins, pies, tarts, cookies, croissants, brownies and more, are taxable when pre-packaged for sale in quantities of less than six.

This means if a brand were to start selling five pieces instead of six, the product is suddenly subject to tax.

When Ben & Jerry's announced that their tubs would now be 473ml, the brand's ice cream suddenly became subject to a snack tax they wouldn't have incurred if packaged at 500ml or more, as reported by The Globe And Mail.

In a column published in the Toronto Sun, Charlebois added that, depending on the province, this shrinkflation — which is when brands lower the quantity of the product being sold without lowering the price — could add 5% to 13% to the price tag of the products.

Earlier this month, it was also noted that Canadian shoppers could be regularly losing money due to grocery receipt errors, with common issues being daily discounts or "take home tonight" offers not being applied at checkout.

If there's one thing we can all learn from this, it's that it's time to start double-checking those product amounts and grocery receipts.

Best of luck out there, shoppers!

This article's cover image was used for illustrative purposes only.