Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 16th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Attention: XXXXX XXXXX
Case Number: 108968
Business Number: XXXXX
December 23, 2008
Dear XXXXX:
Subject:
GST/HST RULING
XXXXX
Thank you for your XXXXX of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX (the Product).
HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
Our understanding of the facts is as follows:
1. The Product is being sold in Canada by XXXXX, but it is made by XXXXX.
2. XXXXX are available in a number of flavours and sizes (XXXXX). Rulings have been requested on this variety, XXXXX, as well as XXXXX and XXXXX.
3. The submission contained the Product proof (packaging label) and the information which follows was obtained from the proof.
4. The front of the packaging contains the following wording:
XXXXX
The front of the package also has an XXXXX picture of the Product, to allow the texture of the Product to be seen. XXXXX.
5. The back of the label contains the Nutrition Facts and Ingredients. The Product ingredients are: XXXXX
6. The proof also has the following information about the Product:
• XXXXX
• XXXXX.
XXXXX
7. Additional information about the Product was obtained from the Canadian web site for XXXXX
• XXXXX
• XXXXX
• XXXXX.
8. The Product is loosely packaged in a non-resealable plastic bag and has a weight of XXXXXg.
Ruling Requested
You would like to know the GST/HST status of supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are taxable at 5% GST or 13% HST pursuant to section 165.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
Generally, every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5% on the value of the consideration for the supply (or 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. Zero-rated supplies are included in Schedule VI. The tax rate in respect of a zero-rated supply is 0%.
Under Part III of Schedule VI, certain supplies of basic groceries are zero-rated. Section 1 of Part III of Schedule VI, zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, other than supplies included in paragraphs (a) to (r) of that section.
In particular, paragraph 1(f) of Part III of Schedule VI excludes from zero-rating the following:
"chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal."
GST/HST Memoranda Series 4.3, Basic Groceries outlines factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
The Product in this case is considered to be a "similar snack food" for purposes of paragraph 1(f) of Part III of Schedule VI. The Product consists of small, crunchy baked XXXXX pieces which is available in some flavours similar to products enumerated in paragraph 1(f). The packaging of the Product is very similar to the type of packaging used for chips, crisps, puffs and similar snack foods. XXXXX. The Product name and labelling includes the term XXXXX.
All of these factors combined lead to the conclusion that the Product is considered to be a "similar snack food" for purposes of paragraph 1(f) of Part III of Schedule VI. As such, the Product is excluded from section 1 of Part III of Schedule VI and is therefore, a taxable supply subject to the GST at 5% or HST at 13% (as applicable).
It should be noted that no one factor is determinative of the tax status of a product and changes in the labelling, packaging and/or marketing (e.g., a change in the product name or varieties offered) would not necessarily result in a different tax status. All factors must be considered in determining whether a product falls within paragraph 1(f) of Part III of Schedule VI.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-5124. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Nancy Jardine
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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