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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 113120R
Client Business Number: XXXXX
Attention: XXXXX
April 2, 2009
Subject:
GST/HST RULING
Application of GST/HST to Acesulfame Potassium
Dear Mr. XXXXX:
We have reviewed our previous GST/HST ruling (113120) regarding the tax status of supplies of acesulfame potassium (the Product) (XXXXX) and have taken into account new information and facts provided subsequent to that ruling. We provide the following ruling, which replaces and supersedes our previous ruling letter issued in case number 113120 and dated XXXXX.
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. Your client, imports bulk quantities of food grade acesulfame potassium, for use as an ingredient in the manufacture of sweetened confectionery products, XXXXX.
2. The Product is an artificial sweetener with the chemical formula C4H4KNO4S.
3. The Product is labelled "XXXXX".
4. Acesulfame potassium is also used in the pharmaceutical industry as an ingredient, for example, in cough syrup.
5. The Product is listed in the Food and Drug Act Regulations, Part B, Division 16, Table IX, as a food additive that may be used in table-top sweeteners, carbonated beverages, beverages, desserts, chewing gum, fruit spreads, salad dressings, confectionery, and bakery mixes.
6. Your client only uses the Product as an ingredient in the manufacture of sweetened confectionary products.
Ruling Requested
You would like to know how the GST/HST applies to supplies of the Product.
Ruling Given
Based on the facts set out above, we rule that supplies of the Product are zero-rated pursuant to section 1 of Part III of Schedule VI. It is therefore, a non-taxable import pursuant to section 6 of Schedule VII and section 213.
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 (13%) in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador) unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.
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 to be mixed with or used in the preparation of such food or beverages, unless one of the exclusions set out in paragraphs 1(a) through (r) applies.
Many products can be used as ingredients for food or beverages for human consumption and they may also have non-food or non-beverage uses. Acesulfame potassium is such a product as it is used as an ingredient in the manufacture of sweetened confectionery (i.e., food) products, XXXXX, but is also used as an ingredient in pharmaceutical (i.e., non-food) products such as cough syrup. The supply of such a multi-use product is zero-rated when it is supplied for a non-food use in the same packaging or form (e.g., in bulk) as when supplied for food or beverage uses. When a good, such as acesulfame potassium, is packaged and promoted for non-food uses only, the supply is taxable.
In this case, the Canada Revenue Agency considers the Product to be a sweetening agent under section 1 of Part III of Schedule VI as the Product is only used as an ingredient in the manufacture of sweetened confectionary products by your client, and is labelled as an "XXXXX". As the Product 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. Furthermore, pursuant to section 6 of Schedule VII and section 213, the Product is a non-taxable import.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9585. 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,
Ben Boboski
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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