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
Case Number: 109783
Business Number: XXXXX
December 19, 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 made by the XXXXX.
2. The submission contained the packaging proof, Product ingredients and a picture of the Product. The XXXXX pieces are XXXXX in shape, with XXXXX visible on the surface of the pieces.
3. The ingredients of the Product are: XXXXX
4. The packaging contains the following wording:
• XXXXX
• XXXXX
• XXXXX
• XXXXX
5. The Product consists of XXXXX XXXXX packaged in a plastic bag which is XXXXX. Each XXXXX weighs XXXXXg, for a total package weight of XXXXXg. The expected life of the Product is XXXXX days.
6. The web site for the XXXXX contained the following additional information about the Product:
• XXXXX
• XXXXX
• XXXXX
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 zero-rated supplies (taxable at 0%) pursuant to subsection 165(3) and section 1 of Part III of Schedule VI.
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.
Paragraph 1(m) of Part III of Schedule VI excludes from zero-rating:
"Cakes, muffins, pies, pastries, tarts, cookies, doughnuts, brownies, croissants with sweetened filling or coating, or similar products where
(i) they are prepackaged for sale to consumers in quantities of less than six items each of which is a single serving, or
(ii) they are not prepackaged for sale to consumers and are sold as single servings in quantities of less than six,
but not including bread products, such as bagels, English muffins, croissants or bread rolls, without sweetened filling or coating;"
For GST/HST purposes, generally a single serving of cake, pie, muffin, pastry, tart, cookie, doughnut, brownie, croissant with a sweetened filling or coating or a similar product, is a serving weighing less than 230g.
Paragraph 112 of the GST/HST Memoranda Series 4.3, Basic Groceries, states that bread includes, but is not limited to, such things as flour and corn tortillas, pita bread, naan bread, rolls, flatbread, foccacia, croissants and bagels. Pita bread is thus a bread product under paragraph 1(m). This paragraph allows bread products to remain a basic grocery product and thus zero-rated, when it has no sweetened filling or coating.
As the Product is a bread product which does not have a sweetened filling or coating, it will thus not be excluded from zero-rating by paragraph 1(m) of Part III of Schedule VI. As the Product is a food that is not included in any of paragraphs (a) to (r) of section 1 of Part III of Schedule VI, supplies of the Product are zero-rated under section 1 of the same Part and Schedule.
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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