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Don’t miss out on profits: How grocery retailers can capitalize on tourism exemptions

Don’t let public holidays be lost opportunities for your retail grocery business. Many Ontario grocers successfully apply for tourism exemptions, allowing their businesses to stay open on holidays that require most other businesses to close. This article provides information on the tourism exemption, its requirements and benefits, and the application process. If you have not already, consider applying for the tourism exemptions described below.

Required Closure Dates

Generally, the Ontario Retail Business Holidays Act (the “Act”) requires retail businesses to close on the following nine public holidays every year:

  1. New Year’s Day,
  2. Good Friday,
  3. Victoria Day,
  4. Canada Day,
  5. Labour Day,
  6. Thanksgiving Day,
  7. Christmas Day,
  8. Easter Sunday, and
  9. Any other public holiday declared by proclamation of the Lieutenant Governor to be a holiday for the purposes of this Act.

However, some exceptions may apply depending on the type and size of the retail store, what the store sells, the number of employees normally working, as well as other criteria.

Tourism Exemption By-Law 

If your store is not already included in an exemption under the Act, it may be beneficial to apply for a tourism exemption, through the council of the municipality where your business is located.

To be eligible under the Regulations to the Act (the “Regulations”), your retail business must be located within two kilometres of a tourist attraction and be directly associated with the tourist attraction or rely on tourists visiting the attraction for business on a holiday. The requirements may not be as onerous as they first appear:

  •  The two-kilometre restriction may not apply to retail businesses located in more rural areas. The Regulations provide that the 2 kilometre requirement does not apply to a local municipality located in a district or regional municipality (or the County of Oxford) having a population of less than 50,000.
  • A “tourist attraction” is defined quite broadly, as a natural attraction or outdoor recreational attraction, historical attraction, cultural, multi-cultural or educational attraction.  Successful applications have referred to outlet malls, hiking trails, natural parks, recreational and cultural centres and local wineries as potential tourist sites warranting the tourist exemption.

In terms of establishing an association with a given attraction, that can be as simple as establishing to the council’s satisfaction that the tourists who visit the attraction account for a considerable amount of the grocery store’s sales. Grocery stores often provide a wide range of products that are popular among tourists. For example, tourists to a nearby attraction often stop at the nearest grocery store for pre-packaged meals, snacks, beverages, pharmacy services, general merchandise such as sunscreen or insect repellent and first aid equipment. Tourists coming to the store to obtain these items can be sufficient to show a direct association.

Separate from and in addition to the exemption set out above, retail business establishments in a municipality may be exempted for up to five holidays a year during which a fair, festival or other special event is being held in that municipality (other than parades). If your location is close to fairgrounds or the sites of other holiday festivities, it may be worth applying for an exemption on those grounds.

It is important to note that each municipality may limit the application of the Act to establishments located in their municipality and define their own requirements for holiday closures and exemptions if they pass a by-law providing that the Act does not apply to their municipality. Toronto’s Bylaw, outlined below, is an example of this practice. You should review or request that your counsel reviews the Bylaws of your particular municipality to ensure the Act applies to your establishment.

Toronto tourism exemption

Tourism exemptions from mandatory closures on public holidays in Toronto are unique. Toronto is exempt from the requirements of the Act and instead determines its own requirements under its Holiday Shopping By-Law. The designated holidays are largely the same, but requirements for the tourism exemption may vary.

Currently, Toronto has made certain areas designated tourist areas where retailers may remain open without making an individual application. Specifically, businesses located in the following tourist areas are exempt from Toronto’s Holiday Shopping By-Law:

  • Queens Quay West;
  • Toronto Eaton Centre and the Hudson’s Bay Company (Yonge & Queen location);
  • Downtown Yonge Street Business Improvement Area;
  • Bloor-Yorkville Business Improvement Area; and
  • Distillery Historic District.

Exemption application 

An application for a tourist exemption under the Regulations must include the following:

  1. a description of the area or the retail business establishment for which the exemption is sought;
  2. the justification, in relation to the seasonal nature, if any, of the tourist attraction for the time period sought in the exemption; and
  3. information establishing that the tourism criteria set out in the Regulation are met.

The base fees required to submit applications are determined by the individual municipalities and can vary between municipalities. Refunds from the municipality for a portion of the application fee may be available for unsuccessful applications. Due to required statutory notice periods, an application will take a minimum of 4 months to process.

Enforcement of mandatory closures if a store opens improperly

Failure to comply with the Act may lead to fines, so obtaining a valid tourist exemption is recommended for grocery retailers who wish to serve customers on statutory holidays.  The minimum fines for retailers who open businesses on prohibited days are $500 for the first offence, $2,000 for a second offence and $5,000 for a third or subsequent offence. However, these are minimums only.  The Act states that retail outlets may be fined up to $50,000 or the total amount of gross sales for the holiday, whichever is greater.

At Sotos LLP, we have decades of experience advising clients on retail grocery issues. Here are three ways that Sotos can help retail grocery businesses:

  1. Assistance in obtaining a tourism exemption: Sotos can provide guidance on the criteria for obtaining a tourism exemption and help retail grocery businesses prepare a successful application.
  2. Compliance with the Act: Sotos can advise retail grocery businesses on the requirements of the Act and help them ensure that they are compliant to avoid fines.
  3. Review of municipal bylaws: Sotos can review the bylaws of your particular municipality to ensure compliance with its requirements for holiday closures and exemptions.

This article was initially published in Canadian Grocer.

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