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Compilation Services for Food & Beverage Manufacturing Canada | Custom CPA
🥫 Food & Beverage Industry Accounting

Compilation Services for
Food & Beverage Manufacturing in Canada

📌 Quick Summary

Canadian food and beverage manufacturers operate at the intersection of high regulatory scrutiny, complex inventory costing, volatile raw material prices, and demanding retailer and lender financial reporting requirements. From a small craft beverage producer seeking its first bank facility to a mid-size food processor supplying major grocery chains, compiled financial statements must accurately reflect cost of goods manufactured, inventory at lower of cost and NRV, co-packer arrangements, and SFCR/CFIA compliance costs. This comprehensive guide covers exactly what a CPA compilation engagement delivers for a Canadian food and beverage manufacturer — and why industry-specific financial statements protect your financing, your retailer relationships, and your CRA compliance.

1. Food & Beverage Business Types Served

Canadian food and beverage manufacturing encompasses a remarkably diverse range of operations — from a two-person artisan cheese producer to a multi-facility beverage bottler supplying national grocery chains. Each type has distinct inventory flows, regulatory obligations, and financial reporting needs. Here is the full landscape of businesses that benefit from food and beverage manufacturing compilation services:

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Meat & Protein Processors
  • CFIA federally inspected facility costs
  • Live animal to finished product cost flow
  • Cold chain inventory tracking and shrinkage
  • By-product revenue recognition
  • Federally regulated slaughter and processing
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Craft Breweries & Distilleries
  • Excise duty on alcohol production
  • Batch costing per recipe/SKU
  • Aging and maturation inventory timing
  • Provincial liquor board reporting
  • CRA excise licence compliance costs
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Specialty & Natural Food Producers
  • Organic certification costs
  • Short shelf-life inventory management
  • Small-batch production costing
  • Retailer deduction and chargebacks
  • Co-packer arrangement accounting
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Non-Alcoholic Beverage Producers
  • High-volume production with low margins
  • Concentrate vs. finished goods inventory
  • Returnable container deposit liabilities
  • Private label vs. branded production split
  • Bottling line depreciation and uptime costs
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Bakery & Confectionery Manufacturers
  • Daily perishable production scheduling
  • Returns and day-old product write-offs
  • Seasonal demand and inventory planning
  • Co-manufacturer vs. own production accounting
  • Retail slotting fees and promotional costs
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Packaged & Processed Food Manufacturers
  • BOM (bill of materials) driven cost of production
  • Packaging cost allocation per SKU
  • Customer promotional allowances and deductions
  • Food safety system compliance costs
  • Export sales zero-rating and ITC recovery

For food and beverage businesses that are also managing distribution entities, fleet vehicles, or retail outlets, our Fractional CFO for Automotive Businesses guide covers fleet-specific financial management. For agricultural businesses that supply raw materials to food manufacturers, our Agriculture Tax Services guide covers the upstream financial considerations. For food manufacturers planning an eventual sale, our Business Sale Preparation guide is an essential companion. For e-commerce food brands, our E-Commerce GST/HST guide covers the digital sales compliance layer.

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COGM
Cost of Goods Manufactured — the unique income statement line that separates manufacturers from traders
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SFCR
Safe Food for Canadians Regulations — compliance costs must be correctly captured in financial statements
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Excise
Excise duty on alcoholic beverages — a unique tax liability that requires specific accounting treatment
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3 layers
Raw materials, WIP, and finished goods — the three-tier inventory structure unique to manufacturers

🥫 Does Your Food or Beverage Manufacturing Business Have Industry-Specific Compiled Financial Statements?

Custom CPA prepares ASPE-compliant compiled financial statements for Canadian food and beverage manufacturers — with proper cost of goods manufactured schedules, inventory valuation, and lender-ready reporting.

📞 306-584-9090 ✉️ info@customcpa.ca 📅 Book Free Manufacturing Review

2. Why Food & Beverage Manufacturing Compilations Are Specialized

A food or beverage manufacturer's financial statements look fundamentally different from a retailer's or a service business's — because the economics of converting raw ingredients into finished products creates accounting complexity that simply doesn't exist in other sectors. A generic bookkeeper applying retail-style accounting to a manufacturing business will produce financial statements that misstate gross profit, misvalue inventory, and fail to satisfy lender covenant reporting requirements.

The three areas of unique complexity are: Cost of Goods Manufactured (COGM) — the full cost of bringing a product from raw ingredient to finished good, including not just materials but direct labour and allocated manufacturing overhead; Three-tier inventory — raw materials, work-in-process, and finished goods each require separate tracking and valuation; and Industry-specific liabilities — excise duty on alcohol, returnable container deposits, retailer promotional accruals, and food safety compliance costs all require specific accounting treatment under ASPE.

For automotive businesses with comparable manufacturing complexity in their parts distribution operations, our Automotive Compilation Services guide provides a parallel reference. For legal firms advising on food company acquisitions or licensing, our Legal Firm Bookkeeping guide provides context. Growing food manufacturers seeking strategic financial oversight should review our Strategic CFO Advisory Services for the ongoing financial leadership layer.

3. Cost of Goods Manufactured — The Core Accounting Challenge

The Cost of Goods Manufactured (COGM) schedule is the financial statement document that distinguishes a manufacturer's income statement from all others. It tracks the full cost of production — from raw materials consumed through direct labour to manufacturing overhead allocation — and produces the total cost of goods available for sale. Getting this right is the CPA's most critical role in a food manufacturing compilation.

🏭 Cost of Goods Manufactured Flow — Food & Beverage Producer
Step 1
Raw Materials Consumed
Opening raw material inventory + purchases − closing raw material inventory = raw materials consumed in production. Includes all direct ingredients (grain, hops, vegetables, protein, fruit, spices) plus packaging materials allocated to production.
Step 2
Direct Labour Added
Wages and benefits of production employees who directly convert raw materials — line workers, production supervisors, quality control staff on the floor. Excludes administration and sales staff.
Step 3
Manufacturing Overhead Allocated
Facility rent or mortgage on the production facility; utilities (electricity, water, gas) for production; equipment depreciation (CCA); equipment maintenance; food safety and quality systems; cleaning and sanitation costs. Allocated to production on a systematic basis (machine hours, labour hours, or floor area).
Step 4
Add Opening WIP, Deduct Closing WIP
Work-in-process at the beginning of the period (partially completed batches) is added; work-in-process at period end is deducted. The result is total cost of goods completed and transferred to finished goods inventory.
Step 5
Cost of Goods Available for Sale
Opening finished goods inventory + COGM = Cost of Goods Available for Sale. Deduct closing finished goods inventory = Cost of Goods Sold (COGS) on the income statement.
Typical COGM Cost Structure — Canadian Food Manufacturer (% of Total Production Cost)
Raw materials & ingredients
55–65% — largest single component
55–65%
Direct labour
15–25% — varies by automation level
15–25%
Packaging materials
8–15% — varies significantly by product
8–15%
Manufacturing overhead
10–18% — rent, utilities, equipment
10–18%
Regulatory & food safety costs
3–8% — CFIA, SFCR compliance
3–8%

4. Inventory Valuation for Food & Beverage Manufacturers

Inventory valuation is the most technically demanding aspect of a food manufacturing compilation. ASPE requires inventory to be measured at the lower of cost and net realizable value (NRV) — a principle with serious practical implications for food manufacturers whose products have shelf lives, seasonal demand, and perishability risk.

Inventory Layer What It Includes Valuation Basis F&B-Specific Consideration
Raw Materials All direct ingredients awaiting processing; packaging materials; labels; caps/closures Purchase cost (weighted average or FIFO) Commodity ingredients subject to price volatility; assess NRV if market price has dropped below purchase cost
Work in Process (WIP) Batches currently in production; aging/maturing product; product awaiting final packaging Cost of materials consumed + direct labour + portion of overhead applied to date Craft breweries and distilleries have extended WIP periods (aging); dairy has culture-active WIP; complex to value without production records
Finished Goods Completed, packaged product ready for sale; product at third-party warehouses; in-transit inventory Full allocated production cost (materials + labour + overhead) Must assess NRV: shelf-dated products approaching best-before date; seasonal items post-season; private label items with cancelled orders
Packaging Materials Bottles, cans, pouches, cartons, shrink wrap, labels, printed packaging Purchase cost; lower of cost and NRV Packaging with discontinued SKU labels may need write-down; minimum order quantities create excess packaging risk
⚠️ Year-End Inventory Assessment — Food Manufacturer Checklist
Physical inventory count — mandatory before any CPA can finalize the compilation. Must include all locations: owned warehouse, third-party cold storage, co-packer's facility, in-transit goods. Required
Best-before date assessment — any finished goods with best-before dates within 60–90 days of year-end must be assessed for NRV. If selling price (net of disposal costs) is below cost, write down to NRV. Perishability Risk
Slow-moving SKU review — products with no or minimal sales movement in the past 90 days should be assessed. If demand has permanently declined, write down to NRV or zero. Balance Sheet Protection
Excise-bonded inventory (if applicable) — for breweries, distilleries, and wineries, excise duty accrues on alcohol as it is produced/packaged. Bonded warehouse inventory has a corresponding excise duty liability that must be accurately stated. Alcohol Producers
Co-packer inventory confirmation — if finished goods are held at a co-packer's facility, obtain a written confirmation of quantities on hand. This inventory is an asset you own, even if it's on someone else's premises. Third-Party Holdings

📊 Food Manufacturers — Your Inventory Valuation Must Reflect Reality at Year-End

Custom CPA guides Canadian food and beverage manufacturers through the complete year-end inventory assessment, COGM schedule, and ASPE-compliant compilation process — ensuring your financial statements are accurate and lender-ready.

📞 306-584-9090 ✉️ info@customcpa.ca 📅 Book Manufacturing CPA Call

5. Co-Packer & Contract Manufacturing Accounting

A significant portion of Canadian food and beverage production occurs through co-packing arrangements — where a brand owner contracts with a third-party manufacturer to produce their product. Co-packer accounting requires careful attention to inventory ownership, cost accumulation, and revenue recognition because the economic substance of the arrangement must drive the accounting treatment.

Co-Pack Arrangement Inventory Ownership Accounting for Brand Owner Key Disclosure
Brand supplies ingredients; co-packer converts for fee Brand owner throughout the process Raw materials on brand owner's balance sheet; co-packing fee added to conversion cost; finished goods at total cost (materials + fee) Note discloses co-packer relationship; third-party inventory held outside company premises
Co-packer purchases all inputs; sells finished goods to brand Co-packer until delivery to brand owner Brand owner records finished goods purchase at agreed price; no WIP or raw material on balance sheet Inventory valuation note; significant supplier dependency disclosure if one co-packer is used exclusively
Toll manufacturing (brand owns all materials throughout) Brand owner — materials never leave brand's legal ownership Same as first scenario but with explicit toll manufacturing agreement; management must confirm physical inventory at toll manufacturer at year-end Nature of arrangement; counterparty concentration; insurance arrangements
Co-packer produces for multiple brand owners on shared lines Segregated by owner — co-packer must maintain separate inventory records per client Brand owner must receive a written inventory confirmation from co-packer at year-end to support balance sheet amount Third-party confirmation obtained; any quality holds or rejected batches at year-end

6. GST/HST for Food & Beverage Manufacturers

GST/HST compliance for food and beverage manufacturers is more complex than for most businesses because of the mixed supply landscape — many food products are zero-rated (basic groceries), while others are fully taxable (carbonated beverages, candy, chips, alcoholic drinks). Getting the classification right at the product level is critical to avoid CRA assessments. For a detailed exploration of GST/HST rules relevant to food businesses selling online, our E-Commerce GST/HST guide provides complementary coverage.

Product Category GST/HST Treatment ITC on Production Inputs? Notes
Basic groceries (unprocessed / minimally processed food) Zero-rated (0%) ✅ Yes — ITCs recoverable on inputs Most staple food ingredients sold retail qualify; manufacturer recovers all GST paid on production inputs
Alcoholic beverages Fully taxable — plus excise duty ✅ Yes — full ITCs on all inputs Excise duty is a separate federal tax collected at the point of production; HST applies on sale price including excise
Carbonated beverages (non-alcoholic) Fully taxable ✅ Yes — full ITCs Carbonation makes beverages taxable; non-carbonated juices in large containers may be zero-rated
Candy, chips, and snack foods Fully taxable ✅ Yes — full ITCs These categories are specifically excluded from zero-rating — common area of misclassification
Exports (goods shipped outside Canada) Zero-rated ✅ Yes — full ITCs on inputs Export documentation required; food exporters benefit significantly from zero-rating + full ITC recovery
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Excise Duty — A Unique Obligation for Alcohol Producers: Canadian craft breweries, distilleries, and wineries have a tax obligation entirely separate from GST/HST: federal excise duty on alcohol. Excise duty is calculated based on the volume of alcohol produced and must be remitted to CRA monthly. It represents a significant production cost — approximately $3.51–$37.22 per litre of absolute ethyl alcohol depending on the product type and producer size. Excise duty is an accrued liability in the financial statements (accruing as product is produced) and must be reflected in inventory cost and in the COGM schedule. A CPA experienced in food and beverage manufacturing will ensure excise duty is correctly classified — not buried in general expenses — and that the compiled financial statements reflect the true cost of production.

7. Regulatory Compliance Costs in Food Manufacturing Financial Statements

Canadian food manufacturers operate under some of the most demanding regulatory environments of any industry — SFCR (Safe Food for Canadians Regulations), CFIA inspection requirements, provincial health authority licensing, organic certification, HACCP plan implementation, and export certification all generate real costs that must be correctly classified in the financial statements.

📋 Regulatory Compliance Costs — Correct Accounting Classification
CFIA inspection fees — the cost of mandatory CFIA inspections for federally registered meat, dairy, and other facilities is a period operating cost. Some inspection costs directly attributable to a specific production run may be allocated to COGM as a production overhead. COGM or Period Cost
SFCR compliance system implementation — the capital cost of implementing a Safe Food for Canadians-compliant food safety system (software, training, documentation, consultants) may be capitalized as an intangible asset and amortized over its useful life — or expensed immediately if under the materiality threshold. Capital vs. Expense
Organic certification costs — annual organic certification body fees are operating expenses. Initial certification build-out costs may be capitalized. Organic premium pricing justifies separate tracking of certification costs against premium margin contribution. Premium Margin Tracking
Product recall reserves — food manufacturers with public recall risk should consider whether a contingent liability provision is required. ASPE requires disclosure of contingencies where an obligation is likely and estimable. Contingent Liability
Retailer deductions and chargebacks — major grocery retailers charge manufacturers for promotional allowances, listing fees, spoilage credits, and delivery deductions. These must be accrued against revenue — not treated as operating expenses — and reconciled to retailer statements at year-end. Revenue Reduction

8. What a Complete Food & Beverage Manufacturing Compilation Includes

A food and beverage manufacturing compilation prepared under CSRS 4200 and ASPE delivers a complete, industry-specific financial statement package. Here is the full deliverable:

Financial Statement Component F&B Manufacturing-Specific Content Who Uses It
Compilation Engagement Report Basis of accounting, management responsibility, no assurance provided — required opening page of all compilations under CSRS 4200 All readers; bank; CRA; management
Income Statement Revenue by customer channel (retail, foodservice, export); COGM; gross profit; operating expenses; EBITDA Lenders for DSCR; retailers for supplier health; management for margin analysis
Cost of Goods Manufactured Schedule Detailed COGM: raw materials consumed, direct labour, manufacturing overhead, WIP movement Bank; management for cost control; CRA verification
Balance Sheet Inventory by layer (raw materials, WIP, finished goods); equipment and leasehold (CCA); excise duty payable; retailer deductions payable; returnable deposit liabilities Bank for asset-based lending; trade creditors; management
Notes to Financial Statements Accounting policies (inventory costing method, overhead allocation, revenue recognition); co-packer arrangements; excise duty obligations; contingencies; related party transactions; debt terms All readers — notes are legally required under ASPE
Inventory Continuity Schedule Opening balance + additions (production) − disposals (COGS, write-offs) = closing balance by inventory tier Bank for working capital facility; internal management

9. Lender & Retailer Reporting Requirements

Food and beverage manufacturers have reporting obligations to two distinct commercial audiences — their bank or working capital lender (who finances inventory and receivables) and their retail or foodservice customers (who evaluate supplier financial health as a condition of continued listing). Meeting both sets of requirements professionally is a core CPA responsibility.

Audience What They Require Typical Deadline Format
Bank / ABL Lender Annual compiled (or reviewed for larger facilities) financial statements; inventory aging and continuity; accounts receivable aging; DSCR calculation per covenant; monthly borrowing base certificates for operating line 120–180 days after fiscal year-end (per loan agreement) ASPE compilation; CPA-signed; with inventory and COGM schedules
Major Grocery Retailers (Loblaws, Sobeys, Metro, Walmart) Vendor financial health assessment — some retailers require annual financial statements as a condition of supplier status, particularly for co-branded or private label programs Per retailer's vendor management program — typically annual Usually a standardized financial information form; compiled statements may satisfy requirement
BDC / Government Lenders Business plan with financial projections + annual compiled statements; COGM schedule; gross margin by channel Per loan agreement and annual review cycle ASPE compilation; with supporting schedules as specified in loan agreement
CRA (T2 Filing) Financial statements supporting T2 schedules; inventory details; COGM for Schedule 1 reconciliation; CCA schedule by class 6 months after fiscal year-end for T2; corporate tax balance due 2–3 months after year-end ASPE compilation attached as T2 schedule 100/125 supporting documentation
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Working with Your CPA Year-Round: The most efficient food manufacturing compilations are produced by CPAs who review monthly management accounts, monitor inventory builds and write-downs, and identify year-end adjustments in advance. A CPA engaged quarterly — not just at year-end — reduces the compilation timeline, catches issues before they become material misstatements, and provides the management reporting that growing food companies need. Our Core Accounting & Tax Services include ongoing monthly support for food and beverage manufacturing clients. Our Business Planning & Financial Modeling services assist food manufacturers seeking new financing or expansion planning.

✅ Custom CPA — Compilation Services Built for Canadian Food & Beverage Manufacturers

COGM schedules, three-tier inventory valuation, excise duty compliance, co-packer accounting, and ASPE financial statements — complete compilation services for every type of Canadian food and beverage manufacturer.

📞 306-584-9090 ✉️ info@customcpa.ca 📅 Book Free Consultation

10. Frequently Asked Questions

What financial statements does a food manufacturing company need in Canada? ▼
A Canadian food or beverage manufacturer typically needs the following financial statements and reports: Annual CPA-compiled financial statements under ASPE — required for bank financing, trade credit applications, and T2 corporate tax filing. The compilation includes: an income statement showing revenue, cost of goods manufactured (COGM), gross profit by channel, and operating expenses; a balance sheet with inventory by tier (raw materials, WIP, finished goods), equipment and leasehold improvements, and all liabilities including excise duty payable, retailer deductions accruals, and debt; a statement of retained earnings; and notes under ASPE covering accounting policies (inventory costing method, overhead allocation, revenue recognition), related party transactions, debt terms, and any contingencies. Cost of Goods Manufactured (COGM) schedule — a supporting schedule showing raw materials consumed, direct labour, manufacturing overhead allocated, and WIP movement. This is a mandatory supplement for manufacturing businesses. Monthly management accounts — a monthly income statement comparing actual to budget; gross margin by product line or customer channel; COGM variance report (actual vs. standard cost); and inventory continuity schedule showing movements. Inventory continuity schedule — opening balance, production additions, COGS deductions, write-offs, and closing balance by inventory tier. Required by most lenders as part of their working capital facility monitoring. Reviewed statements for larger operations: if your bank credit facility exceeds $2M, your loan covenant may require reviewed (rather than compiled) financial statements. Review provides limited assurance (the CPA performs inquiries and analytical procedures) vs. compilation (no assurance). Confirm your covenant requirements with your relationship manager.
How is inventory valued for a food manufacturing company in Canada? ▼
Canadian food manufacturers value inventory under ASPE at the lower of cost and net realizable value (NRV). Determining cost: under ASPE Section 3031, inventory cost includes all costs of purchase (raw materials at invoice price plus freight, duties, and applicable taxes net of recoverable credits); costs of conversion (direct labour applied to production; and manufacturing overhead — both variable overhead at actual and fixed overhead at a normal production level allocation); and any other costs to bring inventories to their present location and condition. Costing methods: manufacturers use either FIFO (First In, First Out) or weighted average cost. LIFO is not permitted under ASPE. The chosen method must be applied consistently. For food businesses with rapid turnover and high perishability, FIFO most accurately reflects the actual flow of goods. Weighted average is acceptable for homogeneous bulk ingredients (grain, oil, sugar). Net realizable value assessment: at every reporting period, management must assess whether any inventory's NRV has fallen below cost. For food manufacturers, the most common write-down triggers are: best-before dates within 60–90 days at year-end; discontinued SKUs with obsolete packaging; slow-moving seasonal products post-season; and products subject to quality holds or suspected defects. When NRV is below cost, inventory is written down to NRV — the write-down goes to COGM or a separate write-down expense line. The write-down cannot be reversed if NRV later recovers (except for agricultural produce, which has specific ASPE treatment).
What is the difference between food manufacturing and food distribution for accounting purposes? ▼
The fundamental accounting difference between food manufacturing and food distribution is in how Cost of Goods Sold (COGS) is calculated and how inventory is valued. Food manufacturers convert raw ingredients into finished products through a production process. Their income statement shows: Revenue minus Cost of Goods Manufactured (COGM) = Gross Profit. The COGM schedule captures raw materials consumed + direct labour + manufacturing overhead applied = total cost to produce. Inventory appears on the balance sheet in three tiers: raw materials, work in process, and finished goods. Manufacturing overhead (facility rent, utilities, equipment depreciation, quality control) must be systematically allocated to production cost — it becomes part of inventory value, not a period expense. This is called absorption costing under ASPE. Food distributors and wholesalers purchase finished goods from manufacturers and resell them. Their income statement shows: Revenue minus Cost of Goods Sold (purchase cost of goods sold) = Gross Profit. COGS is simply the purchase price of goods sold. Inventory has one tier: merchandise inventory at purchase cost. Operating expenses (warehouse rent, delivery costs, salaries) are period costs — they do not flow through inventory. Why the distinction matters for compilations: a CPA who applies distributor-style accounting to a food manufacturer will understate inventory value (by not capitalizing overhead into inventory), overstate period expenses, and misstate gross margin — making the financial statements useless for management decisions, bank reporting, and DSCR calculations. The COGM schedule in a food manufacturer's compiled financial statements is the document that demonstrates the CPA understands manufacturing economics.
How does GST/HST apply to food and beverage manufacturing in Canada? ▼
GST/HST treatment for Canadian food and beverage manufacturers involves both zero-rated and fully taxable products, creating a mixed supply environment that requires careful product-level classification. Zero-rated food products (0% GST/HST charged to customer; full ITCs available on inputs): most basic groceries sold at retail in standard packaging — staple ingredients, bread, produce, dairy, meat, fish in unprocessed or minimally processed form. Manufacturers selling these products charge 0% GST/HST on sales but recover 100% of the GST/HST they paid on production inputs (raw materials, packaging, equipment, facility costs) through ITCs. This often results in a net GST/HST refund from CRA for manufacturers of zero-rated products. Fully taxable food and beverage products (5–15% GST/HST charged depending on destination province): alcoholic beverages (beer, wine, spirits); carbonated beverages; candy, chocolate, and confectionery; chips, crisps, and most snack foods; ice cream; lollipops; and most processed food products that exceed the "basic grocery" threshold. Manufacturer's production inputs: most production inputs for a food manufacturer are taxable purchases — equipment, packaging, most ingredients below a certain processing level. The manufacturer pays GST/HST on these inputs and recovers it through ITCs. For zero-rated final products, the full ITC is recoverable even though no output tax is charged. For taxable final products, the ITCs offset the output tax collected. The critical compliance action: assign each product SKU a correct GST/HST tax code in your accounting system. CRA food classification errors are a common audit trigger for food manufacturers — the distinction between a zero-rated food and a taxable food is product-specific and cannot be assumed.
What are co-packer agreements and how are they accounted for in Canada? ▼
A co-packer (also called a contract manufacturer or toll manufacturer) is a third-party facility that produces food or beverage products on behalf of a brand owner, who then markets and sells the product under their own brand. Co-packer arrangements are increasingly common in the Canadian specialty and natural food sector, where brand owners want to scale production without owning capital-intensive manufacturing equipment. Accounting for the most common co-packer arrangement (brand supplies ingredients, co-packer converts): the brand owner records raw materials as inventory on their balance sheet; when the co-packer completes production, the co-packing fee (the charge for labour and overhead) is added to the raw material cost to arrive at the finished goods cost; the finished goods are recorded on the brand owner's balance sheet even though they are physically located at the co-packer's facility; a written inventory confirmation from the co-packer is required at year-end to substantiate the balance sheet amount. Accounting for the alternative arrangement (co-packer purchases all inputs, delivers finished goods at contracted price): the brand owner records no raw material or WIP inventory; finished goods are recorded only when title passes (typically at delivery); the purchase price from the co-packer is the total inventory cost for the brand owner. Key notes disclosures: under ASPE, material co-packer arrangements must be disclosed in the notes — the nature of the arrangement, who holds inventory risk, insurance arrangements, and any concentration risk if a single co-packer accounts for a significant portion of production. GST/HST in co-packing arrangements: co-packing fees are generally taxable supplies — the co-packer charges GST/HST on their service fee, which is recoverable by the brand owner as an ITC.
Disclaimer: The above contents are provided for general guidance only, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. It does not provide legal advice, nor can it or should it be relied upon. Please contact/consult a qualified tax professional specific to your case.

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