14 November 2005 GST/HST Ruling 63323 - New Housing Rebate - Sale of complex by Estate

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.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the tax status of juice derived from XXXXX.

All legislative references are to the Excise Tax Act (Act) and the regulations therein, unless otherwise specified.

Statement of Facts

1. XXXXX juices XXXXX consist of 100% fruit juice from concentrate. The product comes in XXXXX different all natural flavours including pure XXXXX.

2. XXXXX is currently sold in Canada only in quantities of XXXXX ml. However in the near future, it will also be sold in the smaller size of XXXXX ml and the larger size of XXXXX ml.

3. XXXXX is sold in supermarkets and grocery stores and is generally found on refrigerated shelving near other juices.

4. The container in addition to listing the specific ingredients and storage instructions refers to the fact that the product is 100% juice from concentrate and represents a juice blend with natural flavours. No other descriptions are reflected on the container.

5. The manufacturer recommends drinking XXXXX ml a day, which is approximately XXXXX of the XXXXX ml bottle.

6. XXXXX is advertised XXXXX as an all-natural juice derived from XXXXX. XXXXX is also referred to an XXXXX, containing more naturally occurring XXXXX than other drinks such as blueberry, orange and cranberry juice.

7. XXXXX has recently been assigned a Natural Health Products number.

Ruling Requested

You would like to know the tax status of XXXXX juice sold in containers of XXXXX ml, XXXXX ml and XXXXX ml.

Ruling Given

Based on the facts set out above, we rule that the supply of XXXXX juice in containers of XXXXX ml and XXXXX ml is taxable at 7 % (or 15% as applicable) pursuant to section 165 of the Excise Tax Act (the Act) and, the supply of XXXXX juice in a container of XXXXX ml is zero-rated pursuant to section [1] of Part III of Schedule VI to Act.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is 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

Section 1 of Part III of Schedule VI to the Act zero-rates supplies of food or beverages for human consumption ("basic groceries") and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, unless one of the exceptions set out in paragraphs 1(a) through 1(r) applies.

Subparagraph 1(n)(iii) of Part III of Schedule VI to the Act excludes from zero-rating the supply of:

beverages (other than unflavoured milk) or pudding, including flavoured gelatine, mousse, flavoured whipped dessert product or any other products similar to pudding, except when the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving.

Under this provision, a serving of a beverage is considered to be a single serving when the serving is less than 600 ml (millilitres). In addition to volume, the Canada Revenue Agency considers the manner in which a beverage is packaged, marketed and promoted to determine if it is a single serving.

After reviewing all the relevant material (packaging, labelling and promotional material), we concur that XXXXX juice is a beverage. Although this product has a Natural Health Product (NHP) number, this factor alone would not change the status of this product from a beverage to a dietary supplement.

In addition, while we appreciate the fact that the manufacturer recommends a daily serving of XXXXX ml to achieve maximum health benefits (although the manufacturer does not discourage drinking the beverage in amounts exceeding XXXXX ml), it would not be unreasonable for a person to consume a XXXXX ml bottle of XXXXX juice in a single occasion. Finally, we cannot distinguish this beverage sufficiently from similar beverages sold in quantities of less than 600 ml.

Consequently, the CRA considers XXXXX juice in bottles that are less than 600 ml to be single serving of juice and therefore taxable pursuant to paragraph 1(n) of Part III of Schedule VI to the Act.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 954-5124.

Yours truly,

Gabrielle Nadeau
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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